1.1. In October 2005, the stock exchanges submitted their preliminary observations on the Initial Public Offering (IPO) of Yes Bank Ltd. (YBL) which hinted at the possibility of large scale off-market transactions immediately following the date of allotment and prior to the listing on the stock exchanges. SEBI therefore carried out a preliminary scrutiny by calling for data from the depositories and the Registrar to the Issue (RTI). SEBI found that, many demat accounts in fictitious/ benami names were opened by certain entities (hereinafter referred to as the "Key Operators") and these entities had cornered/ acquired the IPO shares, by making applications in fictitious/ benami names with each of the applications being of small value so as to make it eligible for allotment under the retail category. The aforesaid demat accounts are hereinafter referred to as "afferent accounts" for the sake of brevity. The investigation conducted by SEBI further revealed that subsequent to the allotment of IPO shares, the fictitious/benami allottees had transferred the said shares to their principals which were identified by SEBI as key operators / master account holders. The modus operandi as detailed above led to the prima facie view that the thousands of entities in whose names demat accounts and bank accounts had been opened and IPO applications made, were either benami, name lenders or non existent. 1.2. On noticing the irregularities and widespread abuse, SEBI acted against the entities who were responsible for the irregularities by passing interim order dated December 15, 2005 restraining them from participating in all future IPOs and also directing the depositories to effectively freeze their dematerialized accounts. 1.3. It was noticed during the course of preliminary scrutiny of Yes Bank IPO, that all the dematerialized accounts in fictitious / benami names had been opened with the DP Karvy Stockbroking Ltd. ("Karvy DP"). Therefore, in the said interim order dated December 15, 2005 it was mentioned that "Also, the role of Karvy-DP i.e. Karvy Stockbroking Ltd. that opened the dematerialized accounts of 6315 entities being benamis of Roopalben Panchal and 1315 entities being benamis of Sugandh probably without taking adequate steps to ascertain the genuineness of these entities while acting as a facilitator in what appears to be an act of either gross negligence or active collusion ill behoves them as a SEBI registered market participant." 1.4. In view of the prima facie finding as above, vide the interim order dated December 15, 2005 in the matter of Yes Bank IPO, the following direction was issued by SEBI against Karvy DP: NSDL is directed to undertake a comprehensive inspection of Karvy-DP particularly focusing on the sytems and procedures, if any, put in place by Karvy-DP for implementing the 'know your client' norms that DPs are required to follow. NSDL shall identify the deficiencies in Karvy-DP with regard to the above and also ascertain from Karvy-DP the particulars of other potential benami accounts more particularly those multiple accounts having the same contact address and / or having the same person / entity authorized to operate these dematerialized accounts. Karvy-DP is directed to fully co-operate with NSDL in the above inspection. NSDL shall submit a report to SEBI detailing the findings of its inspection in a time-bound programme.

1.5. Thereafter, SEBI examined the dealings in another major IPO of IDFC wherein the very same players were suspected to have played a major role in cornering the shares. SEBI issued ad interim orders in the case of IDFC also along the similar lines as done in the case of Yes Bank. In the interim order dated January 12, 2006 in the case of IDFC IPO, SEBI inter alia observed as below: 11.16. Further the reports of inspection of Karvy-DP submitted to SEBI by NSDL and CDSL shows that 'Know your client' norms have not been adhered at all while opening the dematerialized accounts. 11.17. Further, Karvy's internal e-mail correspondences given as Annexure to the NSDL inspection report show that even during November 2005 the top management of Karvy-DP were aware of the issue of multiple dematerialized accounts opened with the same address. It appears that the management of Karvy-DP, on coming to know of the same in the wake of a query from SEBI in some other case had, as early as November 2005, internally decided to process these multiple dematerialized accounts bearing the same address for closure. The above goes to confirm that Karvy-DP had knowledge about the fictitious nature of such multiple accounts. 11.18. Also, some of the documents collected by CDSL during the course of inspection show that Karvy-DP has obtained letters purported issued by the concerned banks such as Bharat Overseas Bank as proof of identity and proof of address of the person for the purpose of opening dematerialized accounts. It is seen that one branch manager has on the same date signed as authorized signatory of different branches of the bank. This raises a doubt as to the authenticity of the bank documents obtained by Karvy-DP for opening dematerialized accounts. SEBI is making reference to RBI regarding such apparent irregularities in the bank documents submitted to Karvy-DP for the purpose of opening the dematerialized accounts. 11.19. It is also noted that in view of significant irregularities noticed during the course of inspection of Karvy-DP, both NSDL and CDSL have directed Karvy-DP not to open new dematerialized accounts till the issue of verifying the genuineness of multiple dematerialized account-holders having the same address is addressed to the satisfaction of the depositories. 11.20. The above facts cast grave doubts as to the genuineness of the thousands of IPO applicants who have apparently furnished the address of Roopalben Panchal or Sugandh or Purshottam Budhwani as their address. The findings of the investigation/Inspection of the concerned banks by RBI has fortified the initial findings of SEBI that Karvy-DP has actively colluded with the above entities in opening multiple/benami bank accounts and dematerialized accounts in the names of fictitious persons. 1.6. In view of the findings as above, SEBI in the interim order dated January 12, 2006 in the matter of IDFC IPO, inter alia, issued the following directions against Karvy DP: 12.5. Thousands of dematerialized accounts being opened on the same day with the same branch and being introduced by the same bank should have alerted the DPs at the time of opening of the dematerialized accounts. However the fact that DPs failed to exercise even this basic due diligence gives rise to a suspicion that they have actively colluded with the perpetrators. It is a matter of serious concern that Karvy-DP has opened such apparently benami / fictitious accounts working out to over 95% (42,056 nos) of the multiple dematerialized accounts in relation to IDFC IPO. I note that Karvy-DP has already been directed by the depositories to verify the genuineness of the dematerialized account-holders and to close those dematerialized accounts where it is unable to verify the genuineness of identity and address of the dematerialized account-holders. The depositories have prohibited Karvy-DP from opening new dematerialized accounts till the above process has been completed. I hereby direct Karvy-DP and Pratik-DP to complete the process of verifying the identity and address of dematerialized account-holders and to close / freeze the dematerialized accounts where they are unable to do the verification not later than January 31, 2006. Further, Karvy-DP and Pratik-DP shall put in place systems and procedures to ensure that in future no non-genuine dematerialized accounts are opened by them. Karvy-DP and Pratik-DP shall submit a detailed report to SEBI narrating the actions taken by them in this regard and also give an undertaking that the SEBI's above directions have been fully complied with. I further direct that Karvy-DP and Pratik-DP shall not open new dematerialized accounts till the submission of above report and undertaking to SEBI and obtaining a no-objection from SEBI for accepting fresh business as a DP.

1.7. Further, in view of the findings of preliminary scrutiny as above, SEBI referred the matter to other government agencies including Income Tax Department, Ministry of Company Affairs and the Reserve Bank of India. Also, SEBI filed a complaint with CBI in the matter. 1.8. Pursuant to the same, RBI conducted inspections of the banks involved. The inspection by RBI brought out various irregularities at the end of the banks involved, specifically BhOB and also the role of Karvy group behind the enire gamut of operations. 1.9. Further, the parliamentary Standing Committee on Finance conducted a study on "Efficacy of Reform Process in the Capital Market - Recent IPO Scam".

1.10. For the purpose of the study / examination of the matter, the committee took oral and written testimonies / evidences of SEBI and RBI, the representatives of Investors' Grievances Forum, Indian Overseas Bank, Vijaya Bank, ICICI Bank, HDFC Bank and Bharat Overseas Bank, National Stock Exchange, Bombay Stock Exchange, National Securities Depository Ltd., and Central Depository Services Ltd. Purusuant to the study, the committee submitted its report before the parliament on November 28, 2006. 1.11. The major observations of the committee with regard to the role of Karvy group in the IPO irregularities was as follows: ...The fact that Karvy RTI had made consolidated refund favouring BhOB in respect of thousands of IPO applicants and that the Karvy Group was directing the investment of funds in respect of IPO applications are real eye openers. The Committee also note that Karvy had very conveniently issued an idea paper to BhOB certifying that the applications received for the IPO offer were valid, which shows the extent to which Karvy could prevail upon the Bank. They feel that the discreet arrangement for mutual benefit of BhOB and Karvy would have gone further ahead had there been no unearthing of the IPO scam.

61. The Committee are convinced that the role of Karvy Group of Companies in the IPO Scam was questionable right from the beginning...." In view of the above, the committee advised SEBI to conduct investigation in all areas of manipulation allegedly done by the Karvy Group. The committee further observed that

62. ... As a major part of the malfunctioning leading to the scam could be attributed to the role of the intermediary, the Karvy Group of Companies which performed multiple functions in all directions, the Committee feel that the role of such intermediaries should be examined minutely with a view to see that those operating in multiple capacity are not able to manipulate the system.... 1.12. Besides the above, the committee, in various parts of the report has made many adverse observations regarding the role of Karvy group companies in the IPO irregularities. 1.13. Further, SEBI also received references from various Government Agencies including Reserve Bank of India ('RBI'), Serious Fraud Investigation Office ('SFIO') and Intelligence Bureau ('IB'). Various investor complaints were also received alleging irregularities in various IPOs.

1.14. In the course of investigations pursuant to interim orders in the cases of Yes Bank and IDFC IPOs, SEBI noticed that some of these multiple accounts were opened in June 2003. The involvement of these accounts in Initial Public Offerings prior to that of Yes Bank and IDFC were looked into. Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an investigation into the buying, selling or dealing in the shares issued through Initial Public Offerings (IPOs) of companies during the period 2003-2005. The investigation conducted by SEBI found that the modus operandi, as detailed above, had been adopted for cornering of IPO shares in 21 IPOs that came during 2003-2005. 1.15. The investigations prima facie revealed the substantial involvement of Karvy group companies in the IPO irregularities. It was found that Karvy-DP had, during 2003, tied up with BhOB for the purpose of provding IPO finance to their demat account clients. Based on introduction of saving account by Karvy, BHOB disbursed the loan amount to the clients of Karvy DP. However, with passage of time, it appears that Bharat Overseas Bank officials chose to rely more on Karvy's DP account details and drew comfort therefrom while dropping their guard in the matter of opening bank accounts and verification thereof. Exploiting the blind trust and complacency on the part of BhOB, Karvy gave short shrift to the KYC procedures. Thus in the year 2005 when market for IPOs was booming, Karvy-DP did not comply with the account opening formalities by opening multiple demat accounts in fictitious / benami names. Thereafter, in order to make its account opening procedure seemingly compliant, Karvy-DP resorted to fabrication of bank documents towards POI and POA and also arranged for photographs from other sources. The perfect matching of the fabricated bank documents with the details available in the depository system gave rise to the possibility that the bank documents might have been forged by the DP itself. Thus, it appeared that Karvy, being the progenitor of the entire scheme won over the trust of the allies in the bank and made its pitch effectively in the market, besides making common cause with the sub brokers and financiers who were part of the manipulative assemblage. Other Karvy group entities namely Karvy Consultants Ltd. and Karvy Computershare P Ltd. ("Karvy RTI") were also found to have played their part by providing / arranging IPO finance and providing consolidated refund cheques in respect of the afferent accounts and directing the bank to credit the refunds in the accounts of the key operators.

1.16. In the above facts and circumstances, SEBI vide an ad interim ex parte interim order dated April 27, 2006 inter alia directed as below: 17.7. In view of the detailed findings against Karvy DP and Pratik DP in this order, Karvy DP and Pratik DP, in my view prima facie do not appear to be fit to deal in securities market as SEBI registered intermediaries. Appropriate quasi-judicial proceedings are being initiated against the two DPs. In view of the substantial findings of a serious nature brought out in this order against Karvy DP and Pratik DP, in addition to what has been noticed in the earlier two interim orders in the cases of Yes Bank and IDFC, I direct that Karvy DP and Pratik DP shall not carry on the activities as DP till the completion of enquiry and passing of final order, excepting for effecting transfer of BO account to another SEBI registered DP on request. Notwithstanding this direction, Karvy DP and Pratik DP shall continue to be governed by the SEBI (Depositories and Participants) Regulations, 1996 and other applicable legal provisions in other respects. 17.8. Since the other business groups of Karvy have appeared to have acted in concert in the gamut of the IPO manipulations, I further direct Karvy Stock Broking Ltd., Karvy Computershare Pvt. Ltd., Karvy Investor Services Ltd. and Karvy Consultants Ltd. not to undertake fresh business as a Registrar to Issue and Share transfer agent, excepting those businesses already contracted as on date. 1.17. Subsequent to the issue of ex-parte interim directions as above, an opportunity of post decisional hearing was granted to the Karvy group. After considering the oral and written submissions of Karvy group, vide order dated May 26, 2006, the following directions were issued:

(a) KSBL is directed not to act as a depository participant, pending enquiry and passing of final orders, except for acting on the instructions of existing beneficial owners, so that the interests of existing BOs remain unaffected. It shall transfer the demat account of an existing BO to another SEBI registered DP, on request. It is clarified that KSBL shall continue to be governed by the SEBI (Depositories and Participants) Regulations, 1996 and other applicable legal provisions. (b) KSBL, as a stock broker, is directed not to undertake any proprietary trades in securities, either off-market or on market, pending enquiry and passing of final orders. (c) KCPL is directed not to act as a registrar to an issue and as a share transfer agent, pending enquiry and passing of final orders, except for the assignments already contracted before passing of interim order dated April 27, 2006. This direction will not apply to KCPL as Registrar and Transfer Agent to Mutual Funds. It is noted that Karvy Investor Services Ltd. and KCL are not registered as registrars to an issue or share transfer agents with SEBI. 1.18. The DP filed an appeal before the Hon'ble Securities Appellate Tribunal (SAT) against the aforesaid order of SEBI dated May 26, 2006 and the same was dismissed by SAT vide order dated January 8, 2007 with a direction to SEBI to complete the enquiry not later than March 31, 2007. Further, SAT had directed SEBI to take a final decision in accordance with law within two months thereafter. In the said order SAT had inter alia observed "what needs to be examined is whether the appellant had really failed to get alerted to the abuse of its systems by the so called sub-brokers or whether there was active collusion of the appellant with its clients for abusing the IPO process and sharing the gains arising from the same. We can not decide these issues at this stage not can it be said as to which of these two versions is correct. It is an undisputed fact that thousands of fictitious/ benami demat accounts were opened with the appellant with common addresses and more than 10000 accounts were opened on one single day. The appellant was under a duty to check and comply with the various norms. The obvious appears to have been overlooked. Is the action of the appellant innocent is the question. The appellant is clearly under a cloud and the truth can be known only after a detailed inquiry. The findings of the inquiry will either remove the appellant or the cloud. (emphasis supplied) Thereafter, SAT, on an application filed by SEBI, extended the time limit upto the end of June 2007.

2. APPOINTMENT OF ENQUIRY OFFICER 2.1 In the facts and circumstances, SEBI appointed an Enquiry Officer vide orders dated May 25, 2006 and September 18, 2006 under regulation 5(1) of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as the Enquiry Regulations) to enquire into the alleged violations committed by Karvy Stock Broking Ltd. as a depository participant and stock broker and Karvy Computershare Pvt. Ltd as a Registrar to the Issue while dealing in the IPOs. The alleged violations committed by the said entities are as follows: a. Karvy Stock Broking Ltd. as a depository participant i) Section 12A of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the 'Act') , ii) Regulation 3 and 4 of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the FUTP Regulations)

iii) Regulations 19, 20A, 42, 43, 46 and 52 of Securities and Exchange Board of India (Depositories and Participants) Regulations 1996 (hereinafter referred to as DP Regulations) and iv) Provisions of Securities and Exchange Board of India (Criteria for Fit and Proper Persons) Regulations 2004 (hereinafter referred to as Fit and Proper Regulations). b. Karvy Stock Broking Ltd. as a Stock Broker i) Regulation 3 and 4 of FUTP Regulations, ii) Regulation 5, 7 and 15(1)(b) of Securities and Exchange Board of India (Stock Brokers and Sub - Brokers) Regulations, 1992 (hereinafter referred to as Broker Regulations), iii) Provisions of the Fit and Proper Regulations and iv) Provisions of Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (hereinafter referred to as DIP Guidelines). c. Karvy Computer Share Pvt. Ltd as a Registrar to the Issue i) Section 12A of the Act, ii) Regulation 3 and 4 of the FUTP Regulations, iii) Regulation 6 and 13 of Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 (hereinafter referred to as RTI Regulations) and iv) Provisions of Fit and Proper Regulations. 2.2 The Enquiry Officer submitted his reports dated March 30, 2007 (in the case of DP), March 15, 2007 (in the case of stock broker) and December 20, 2006 (in the case of RTI) and his recommendations in the respective enquiry reports are as follows: i. to prohibit KSBL from acting as a depository participant for a period of 18 months. ii. to suspend the certificate of registration of KSBL as a stock broker for a period of 3 months. iii. to prohibit KCPL from acting as a registrar to an issue for a period of nine months. The enquiry officer further clarified that the prohibition of 18 months recommended by him against the DP was in respect of taking up new assignment / fresh business as a depository participant. The Enquiry Officer also recommended to take into account the period of prohibition already undergone by the DP and the RTI, as per the interim orders of SEBI for the purpose of computing the period of prohibition recommended by him.

2.3 The Enquiry Officer in his report (in the case of DP) had inter alia considered various allegations leveled against the Karvy DP such as assisting the key operators in opening bank accounts, opening of large number of afferent accounts by the key operators, irregularities in opening the demat accounts, non verification of documents pertaining to Proof Of Identity (POI), Proof of Address (POA), fabrication of the documents, IPO funding to the key operators, financing after the closure of the issue, single consolidated refund cheques etc. In so far as the allegations pertaining to the fabrication of introduction letters, the Enquiry Officer had observed that on the basis on the circumstantial evidence alone it could not be conclusively held that the DP had fabricated the said documents. The Enquiry Officer had inter alia observed that the DP had actively facilitated, assisted and abetted many key operators in cornering the shares by facilitating opening of the accounts, facilitating the transfer of securities through pre printed DIS etc. The Enquiry Officer observed that the other entities belonging to the Karvy Group also played an important role in supplementing the action of DP and found that the DP had violated the provisions of Section 12 A of the SEBI Act, Regulation 3 and 4 of FUTP Regulation, 2003, Regulations 19, 42(2) and (3), 43, 46 and 52 of DP regulations 1996 and Clauses 3,9,12,16,19,20& 22 of the Code of Conduct specified in regulation 20A of the DP regulations. 2.4 The Enquiry Officer in his report (in the case of stock broker) had inter alia observed that the findings of the enquiry against KSBL as the depository participant might be considered as a part of the said report as the same is reflective on the various activities of KSBL as a stock broker. The Enquiry Officer further found that the Broker has violated the provisions of regulation 3 and 4(1) of the FUTP Regulations and Clauses A(1), A(3) and A(4) of Schedule II of the Broker Regulations and the provisions of DIP Guidelines. 2.5 The Enquiry Officer in his report dated December 20, 2006 (in the case of RTI) found that KCPL had violated the provisions of Section 12 A (a), (b), (c) of the Act and Regulations 3 and 4 (1) of FUTP Regulations and Clause 3 of the Code of Conduct specified under regulation 13 of the RTI Regulations.

3. SHOW CAUSE NOTICES AND REPLIES 3.1. a) In the case of KSBL DP While considering the Enquiry Report and other materials available on record (which were considered while passing interim orders dated January 12, 2006, April 27, 2006 and May 26, 2006 and also considered at the time of the hearing before the SAT), it was observed that the alleged violations committed by the DP prima facie called for a higher penalty than that recommended by the Enquiry Officer. Accordingly, a notice dated May 4, 2007 was issued to the DP to show cause as to why the period of prohibition as recommended by the Enquiry Officer should not be enhanced to 3 years. 3.2. The DP vide letter dated May 19, 2007 filed its reply to the said show cause notice. The submissions made by the DP in its aforesaid reply in brief are as follows: i) The show cause notice was merely a formality to show the procedural fairness as it has been categorically concluded that the prohibition of 18 months should be enhanced to 3 years. The authority cannot consider any documents which were not considered by the Enquiry Officer. The authority can not travel beyond the Enquiry Report and what was considered therein. a. On the basis of a rubber stamp on a sheet of paper containing 50 names and signatures, it cannot be said that the account holders have been introduced by it to the bank. b. It had effected off market transfers from various accounts based on duly filled in Delivery Instructions Slips (DIS). In respect of the allegation pertaining to the opening of demat accounts using different combinations of surnames, the DP stated that the same were opened after obtaining the application forms submitted by the respective IPO sub brokers with documents relating to KYC requirements.

c. There was a clear division of operations between the DP and the other Karvy entities and that it had not acted in concert or aided and abetted the key operators in opening benami / fictitious demat accounts to corner shares in various IPOs as alleged. The DP stated that it was impracticable to expect the application which were received and bid on the last day were deposited in the bank on the same day itself by any syndicate / sub syndicate member. d. It was not liable for any activities carried out by KCL other than the DP activities of KCL. The DP further stated that it had opened the demat accounts in the ordinary course of business after complying with the KYC requirements. In respect of opening of demat accounts earlier than the date of letter of introduction, the DP submitted that the same happened only in 27 cases as there were deficiencies in the original documents. The DP further clarified that the said deficiencies were identified at the time of the scrutiny and fresh set of documents were sought and the same were received and attached alongwith the application form. e. KCL had financed Shri Purshottam Budhwani and his clients and the DP was aware that Shri Purshottam Budhwani and his clients were applying for the shares in IPO. However, the DP claimed that it was not aware that the said Shri Purshottam Budhwani was a key operator and that he was abusing the IPO process by making fictitious / benami applications. In respect of the issue of single consolidated refund cheques, the DP submitted that the same was a market practice.

f. The DP further stated "In retrospect it is realized that some of the IPO sub brokers who are the alleged key operators have exploited the loop holes in the system and have used Karvy DP as one of the DPs amongst others for carrying out their manipulative designs." The DP further claimed that it had not printed any other details apart from client id, serial number and name in the DIS. The DP further contended that it had not appointed any franchisee and that it had not delegated the activities of the DP to the sub brokers. g. There was no electronic system to store and match the photographs of the demat applicants. The DP asserted that there was nothing wrong or illegal in the activation of demat accounts on the date of closure of issue. The DP also stated that it had not introduced the key operators to open the bank accounts as alleged. h. The DP denied violating the provisions of Section 12A (a), (b) and (c) of SEBI Act and Regulations 3, 4 (1) and 4 (2) of the FUTP Regulations. It also denied of violating the provisions of DP Regulations. In respect of the quantum of penalty the DP relied upon the judgment of the Hon'ble Supreme Court in the matter of Ex-Naik Sardar Singh v. Union of India
(1991) 3 SCC 212. Finally the DP has claimed that it had not committed any violations as alleged. 3.3. In the case of Stock Broker A show cause notice dated May 4, 2007 was also issued to the Broker asking it to show cause as to why action as recommended by the Enquiry Officer should not imposed against it. The stock broker vide letter dated May 19, 2007 inter alia stated that simply because its employees had introduced the accounts and put the address or stamp of the company on the forms, it could not be concluded that the Broker was aware of the activities of the employees. The Broker also denied that it had facilitated the key operators to open many accounts as alleged. The Broker further stated that it had not violated the provisions of the Broker Regulations or the FUTP Regulations. The Broker denied that the Karvy group assisted the key operators in opening the bank account with BhOB. Further the Broker had reiterated the reply of the DP dated May 19, 2007. The Broker inter alia submitted that their employees had not introduced several bank accounts as alleged and added that the introduction of certain bank accounts by the employees were after fulfilling the KYC requirements. In respect of 50 additional names attached to 37 bank accounts of Smt. Roopalben Panchal, the DP reiterated the stand taken by the DP. The Broker further stated that the alleged afferent accounts have been opened by IPO sub brokers. The Broker further stated that simply because the IPO sub brokers used to procure large number of applications along with others could not concluded that it was aware of the financing arrangement. The Broker added that it was not aware about the finances provided by KCL to Smt Roopalben Panchal and that she had made large number of applications. It also contended that the sale of shares by it on behalf of Shri Purshottam Budhwani and Shri Manoj Seskaria was in the ordinary course of business. The Broker asserted that it had not directly or indirectly employed any device, scheme or artifice to defraud in connection with issue or dealing in securities which were listed or proposed to be listed on a recognized stock exchange. Further it stated that it had not violated any of the provisions of law as alleged against it. 3.4. In the case of RTI A show cause notice dated December 20, 2006 was also issued to KCPL and asking it to show cause as to why the appropriate penalty including the penalty as recommended by the Enquiry Officer should not be imposed against it. An opportunity of hearing was granted to KCPL on January 4, 2007.

KCPL vide letter dated January 8, 2007 inter alia stated that there was no material to substantiate the allegation of knowledge in respect of the fictitious nature of the applications pertaining to the key operators made against it. In respect of the common management, KCPL stated that there was clear division of operations between it and the other Karvy entities. In respect of the single consolidated refund orders, KCPL stated that the same was established for the purpose of efficient investor servicing and administrative convenience. KCPL further stated that it had not issued any single consolidated refund order pertaining to the alleged benami/ fictitious applications made by Shri PUrshottam Bhuwani and Shri Manoj Seksaria. It asserted that in case of most IPO brokers such as KSBL, a co ordinator was appointed who was responsible of the effective servicing of the clients of such IPO brokers. KCPL further contended that as an RTI it had no role to play in the financing activity of KCL. In view of the above submissions KCPL requested SEBI to drop the proceedings initiated against it. KCBL further stated that single consolidated refund orders were issued by it on a uniform basis to all such institutions who sought to receive such a consolidated cheques such as ICICI Web Trade Ltd., IDBI Bank, Indian Overseas Bank etc. It is further stated that the said system was according to the specific instructions of the respective IPO applicants and the same was purely intended for facilitating the settlement process and was nearly administrative in nature. KCPL further denied of having any role in the alleged IPO irregularities and added that each of the companies forming part of Karvy Group are independent legal entities.

KCPL further added that the practice of issuance of single consolidated refund orders was undertaken by it since October 2004. It further added that the said practice was undertaken much prior to the KCL financing IPO applications, as alleged. KCPL further in respect of multiple applications stated that 487 applications (in the case of Yes Bank IPO) and 45 applications without beneficiary details were rejected. In the case of IDFC IPO, KCPL stated that 1526 application were rejected on the ground of being multiple applications and 56 applications were rejected for want of beneficiary details. KCPL further added that it was not aware of the fictitious nature of the application made by Roopalben Panchal group and in the said context KCPL stated that it had no role as an RTI to play in the financing activity of KCL.

4. HEARINGS

4.1. An opportunity of hearing was granted by SEBI to RTI on January 4, 2007 Shri R. Parthasarthy the Chairman of the Karvy Group made submissions on behalf of KCPL. As the nine months prohibition as recommended by the Enquiry Officer was already elapsed and taking into account the balance of consideration, vide order dated February 22, 2007 SEBI had lifted the prohibition imposed on KCPL vide interim order dated April 27, 2006. In the said order it was specified that the final findings as to the role of KCPL could be determined only when the final findings as to the role of KSBL was determined in the enquiry proceeding against it. 4.2. An opportunity of hearing was also granted to the DP and the Broker on May 22, 2007, May 25, 2007 and May 29, 2007. Shri Shyam Mehta, advocate represented the DP and the Broker and made submissions on behalf of them. Shri Vinay Chauhan, advocate, and Shri R Parthasarathy, were also present during the time of the hearing. Shri. Shyam Mehta made submissions on the lines of the reply of the DP and the Broker dated May 19, 2007. 4.3. Pursuant to the above hearing, the DP and the stock broker filed written submissions vide letters dated June 6, 2007 and June 8, 2007 respectively. The DP while reiterating its reply dated May 19, 2007 stated that it was not liable for the activities of the KCL as a DP which was at variance with the contentions of Karvy DP made in its reply dated May 19, 2007. The counsel further stated that the authority can not enhance the penalty what was recommended by the Enquiry Officer.

4.4. As the DP and the Broker are admittedly group companies and are functioning under the same management and control and also the fact that the issues involved in all the present proceedings (including that of RTI) are connected / similar and further since the responses of the said intermediaries are common/similar all the present proceedings (against DP, RTI and the Broker) are dealt with in a common order.

5. Issues for Consideration 5.1. Keeping in view the oral / written submissions of Karvy, various documents on record, the observations of the Hon'ble Securities Appellate Tribunal and the findings of the Enquiry Officer, the following issues remain for consideration: o Whether it is a simple case of failure to exercise due diligence or whether Karvy DP had gone beyond in crafting a collusive game-plan with the key operators for the purpose of cornering IPO shares?

o Whether, based on the material available on record, the findings of Enquiry Officer be accepted? and o Whether, based on material available on record, the penalty recommended by the Enquiry Officer is appropriate or whether it calls for a higher penalty? 5.2. Before proceeding with the issues for consideration, I note that the existence of fictitious afferent accounts as opened with Karvy DP are not in dispute as would be evident from the Hon'ble Securities Appelate Tribunal Order dated January 8, 2007. Karvy has also admitted the same in the complaint filed against 4 sub- brokers namely, Grace Consultancy, 402-403, Shashwat, Opp: Gujarat College,Ellisbridge, Ahmedabad - 380006 (Rep by its Proprietor Deepak Panchal) (Accused no.1), Arth Realty Pvt. Ltd, 803, Abhijeet-1, Mithakali Circle, Navrangpura, Ahmedabad - 380009 (Rep by its Director Parag P Jhaveri) (Accused no.2), Purshotham Budwani S/o. Late Ghanshyamdas Budwani Age: 41 years, R/o. B/2, Himalay Housing Co-op Soc, Asalfa, Ghatkopar (W) Mumbai 84 (Accused no.3) and Manoj G Sakseria S/o. Gokulchand Seksana, R/o. 33, Maheshwan Niketan, Peddar Road, Mumbai 26 (Accused no.4). In the memorandum of the complaint, Karvy DP has, inter alia, stated as below:

5.3. "The Complainant herein states and submits that the Company as a Depository Participant opens accounts through its branches and through its associates across the country. For the past 2/3 years, due to the strong market sentiments, number of Companies have offered their shares to the Public. For applying for shares offered by a company, having a depository account is a must which is opened with Depository Participants like Karvy Stock Broking Ltd. The company accepts application forms for opening depository account from business Associates also. For opening a depository account, the applicant has to submit along with application form in the prescribed format duly filled in, various supporting documents like proof of address and identity. The business associates generally collect the applications from various applicants whom they service and submit the same to our Branches for opening the depository account. 5.4. These associates are either provided special rates for opening depository accounts for their clients or are paid remuneration on each account for processing the application. These Business Associates, have collected applications for opening depository accounts from various applicants. Since they had direct contact with the applicants, they are required to verify credentials of the applicant, including verification of documents like proof of address, identity proof, Bank account details etc. of the person who intends to open the account after filling up the prescribed form as per the norms of SEBI and submit the same to our branches. With regard to the accounts under reference, these associates or their friends / relatives have also acted as introducer for each of the accounts. 5.5. The Complainant states that they believed that all the accounts forwarded by the associates are true and correct and are eligible to open the depository accounts. The accused have fraudulently opened fictitious accounts to defraud and cheat the Company. The Complainant herein states that consequent to the order issued by Securities and Exchange Board of India (sebi), National Securities Depository Limited (NSDL) had, vide their letter dated 17th December 2005, directed the Company as Depository Participant to verify the cases. On such verification, the Company came to know that the associates have committed breach of trust with the intention to cheat genuine investor. These associates on demand by the company have failed to produce their customers for identification which has lead the company to suspect that they have opened accounts of non existing persons and got lot of shares allotted to them. Thus they have cheated the genuine investors, Company and committed criminal breach of trust as the Company totally depended on the information and scrutiny of the sub-brokers. 5.6. The Complainant submits that the accused 1 to 4 herein have opened depository participant accounts with ulterior motive and malafied intention to cheat genuine investors knowing fully aware of the facts and committed criminal breach of trust as such the accused committed offence punishable under Section 406 and 420 of IPC." (emphasis supplied). Any discussion on the case would be incomplete without a proper understanding of the processes involved in IPOs. Accordingly, I proceed to deal with the same.

6. IPO Process

6.1. As per information obtained from NSE the IPO process involves the following:

1. The Book Running Lead Manager (BRLM) files the Draft Offer Document (DOD) with SEBI and the stock exchange where the Company proposes to list its securities for their comments/approval.

2. The stock exchange checks as to whether the applicant company is eligible as per the listing criteria for listing on the stock exchange pursuant to its Initial Public Offering.

3. Further, the stock exchange also checks details on the background of the promoters, disclosures made by the Company in the Draft Offer Document including the risk factors mentioned therein etc.

4. The stock exchange thereafter provides an in-principle approval for enabling the company to mention in the offer document that the shares after the issue are proposed to be listed on the stock exchange named therein.

5. After the in principle approval of the stock exchange is issued, and subject to approvals they have to obtain from SEBI and other authorities, if any, the Issuer company can make the public issue. 6.2. Book Building Book building is an electronic mechanism for collection of orders through the IPO infrastructure of the Exchanges. The members who are eligible for using the IPO system or who are entitled to enter the bids are decided by the BRLMs to the issue. (These stock brokers selected by the BRLMs for accepting bids are called syndicate members). The bid data collected through the book building process is provided by the stock exchanges to the Book Running Lead Managers who in-turn forwards the same to the Registrars and Transfer Agent concerned. The physical applications are collected by the Registrars from the banks where the applications and cheques are deposited. The applications are processed by the Registrars and a meeting of the Book Running Lead Managers, Registrars and the Issuer company is held to decide the basis of allotment. The minutes of this meeting which inter alia contain details regarding how the basis has been drawn, total subscription received for the issue, technical rejections, total number of shares to be considered for allotment etc., is submitted to the stock exchanges. To determine the successful allotees, the draw of lots is conducted by the Designated Stock Exchange (draw of lots are done by a SEBI approved Public Representative on the Board of the Designated Stock Exchange) and the basis of allotment is finalised. As such, the stock exchanges do not process or scrutinise the physical application forms or the unique details of the applicants such as addresses, PAN number etc., during the IPO process and hence will not be in a position to ascertain multiple or fictitious applications. On completion of the basis of allotment, the Registrars for the IPO carries out the allotment process by making allotment in accordance with the basis of allotment and then uploading the file containing the details of allotment to the depository which in turn credits the shares to the applicants' beneficiary accounts. The Issuer company will then submit a certificate from a practicing Chartered Accountant or a Company Secretary confirming that the allotment has been done by the Registrars as per the basis approved by the stock exchange. After the completion of the credit of shares, the depositories issue a certificate indicating that the shares as detailed by the Registrars have been credited to the beneficiary accounts to the Issuer which is in turn submitted to the stock exchanges by the Book Running Lead Manager / Issuer company. A confirmation of the dispatch of refund orders is submitted to the stock exchanges by the Registrars. 6.3. Stages in a Book Built Issue The various stages in the book built issue can be broadly described as under: ? In a Book Built Issue, the applicant submits his IPO application along with the cheque / DD to the syndicate member / sub syndicate member for entering bids in the Bid Book. ? It is mandatory for the applicant to indicate his demat account particulars in the application form. Thus it is mandatory for an IPO applicant to have a demat account while making application in an IPO. Further, for the purpose of refund of application money, the bank details of the applicant are downloaded by the RTI from the depository system and therefore it is mandatory for the demat account holder / IPO applicant to indicate his bank details in the depository account. Therefore, opening of bank account and Demat account can be considered as the first stage in making application in book built issue. ? Upon receipt of IPO application along with the Cheque / DD, the syndicate / sub syndicate member verifies the same and thereafter the syndicate / sub syndicate member enters the bid in the BSE / NSE system and forwards the physical applications along with the cheques / DDs to the collecting bank. ? The collecting bank separates the cheques / DDs from the application forms and sends the cheques / DDs for collection and simultaneously forwards the IPO application to the registrar to issue for preparation of application master. ? Upon realization of cheques, Banker to the issue (i.e. Collecting Bank) submits the details of the cheques realized along with bank serial number which forms the basis for the RTI to reject application where cheques have not been realized. ? The master database is prepared by Registrar to an Issue for the purpose of working out the basis of allotment after weeding out invalid and multiple applications as per applicable criteria. ? The Registrar to an Issue, the Post Issue Lead Manager, representative of stock exchange and an official of the issuer company in a meeting decide the basis of allotment and finalise the ratio of allotment. ? Based on the approved basis of allotment, registrar to an issue makes allotment to eligible investors and through a process of corporate action, electronic allotment is made to the demat account of the allottee through depository. ? Concurrently, the Confirmation of Allotment Note (CAN) is dispatched along with the refund order or refund details (in case of direct credit to the bank account). 6.4. The above process is completed within 15 days from the date of closure of the IPO. Thus, it can be seen from the above process that essential steps for applying in book built issue are broadly as under:

1. Opening BANK ACCOUNT and DEMAT ACCOUNT

2. Arranging IPO FINANCE

3. Submission of application along with payment instrument (cheque / DD) to syndicate member and BIDDING

4. Receipt of ALLOTMENT / REFUND ORDER 6.5. Karvy group's presence in the entire chain of IPO process I note that on the basis of data on record, Karvy group entities were ubiquitously present in the entire gamut of the IPO process running from introducing bank accounts, opening of dematerialized accounts, arranging IPO finance, bidding of applications, making allotment, issuing refund, making off-market transfers (DIS) and sale of IPO shares on the stock exchanges. The role of Karvy group entities at each stage of the process has been examined for uncovering Karvy's role at every stage and to ascertain overall control beginning from opening of bank and dematerialized accounts till making refund and off- market transfer of IPO shares. The group's presence in the entire IPO process is schematically depicted as under:

(Editor: The text of the vernacular matter has not been reproduced. required.)

7. Applicable Guidelines 7.1. While opening dematerialized accounts, the DP has to comply with the Know Your Customer (KYC) norms laid down by SEBI through circulars dated August 4, 2000 and August 24, 2004. SEBI vide circular dated SMDRP/Policy/CIR- 36/2000 dated August 4, 2000, has prescribed detailed procedure to be followed by all depository participants at the time of opening beneficiary account. The said circular prescribed the documents which can be accepted by the DPs for the purpose of proof of identity and proof of address. In respect of proof of identity the documents prescribed are PAN Id, Voter Id, Ration Card, Passport etc and for proof of address the documents prescribed are Telephone Bill, Electricity bill etc. Subsequently, vide circular ref: MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 SEBI stipulated that an identity card / document issued by Scheduled Commercial Banks containing the applicant's photo / address may be accepted as POI and POA. The circular further clarified that "the aforesaid documents are the minimum requirement for opening a BO Account. The Depository Participants (DPs) must verify the copy of the document with the original before accepting the same as valid. While opening a BO Account, the DPs are required to exercise due diligence while establishing the identity of the person to ensure the safety and integrity of the depository system." 7.2. In terms of Clause 16 of Regulation 20A of SEBI (Depositories and Participants) Regulations, 1996, "A Participant shall follow the Maker-Checker concept in all of its activities to ensure the accuracy of the data and as a mechanism to check unauthorized transaction." 7.3. While opening bank accounts, the banks have to comply with the applicable KYC norms laid down by RBI and also comply with their internal guidelines in this regard. While providing IPO finance, Banks and NBFCs have to comply with the relevant RBI guidelines including KYC norms.

7.4. The process of public issue is governed by the SEBI (Disclosure and Investor Protection) Guidelines, 2000. As regards, bidding of application forms in the retail category, in terms of Guideline 11.3.1 Clause xvii (a), "The broker may collect an amount to the extent of 100% of the application money as marging money from the clients / investors before he places an order on their behalf.... "

8. For the purpose of this order, the abbreviations occurring in various places in the order would mean: Karvy: Karvy Group including Karvy Stock Broking Limited ( KSBL), Karvy Consulatnts Limited ( KCL), Karvy Computershare Private Limited (KCPL), Karvy Securities Limited (KSL) and Karvy Investor Services Limited ( KISL). 8.1. The DP in its reply dated May 19, 2007 contended that, it was not liable for the violations committed by KCL. In support of its contention, the DP relied upon the judgment of the Hon'ble High Court of Bombay in the matter of SEBI Vs. SKDC Consultants Ltd. However, at the time of the hearing, the counsel for the DP had not pressed the said contention and further submitted that the DP would be responsible for the acts done by KCL in its capacity as the DP and not as NBFC. The said submission has been further strengthened by the following statement made by the DP in its reply dated May 19, 2007; "In this regard it is submitted that for the activities carried out by KCL, other than the DP activities, the company cannot be held liable for violations committed by KCL, if any". However, I note that in its written submission dated June 6, 2007, the DP further contended that it is not liable for the alleged violations of KCL as a DP. KSBL further stated that it only took over the business obligations of KCL and not the proceedings in connection with any alleged violation committed by KCL.

8.2. In this context, I note that SEBI had approved the transfer of depository business of KCL to KSBL, inter alia pursuant to the request made by KSBL through NSDL. I observe that NSDL vide letter dated June 16, 2005 informed SEBI about the intention of KCL to transfer its depository business to KSBL and further stated that the infrastructure of KCL would be used by KSBL, pursuant to the transfer arrangement ( between KCL and KSBL). In its letter cited above, NSDL had also enclosed the application (Form 'E') of KSBL for the grant of certificate of registration as a DP. In the said application, KSBL inter alia stated that KCL was one of its group companies and further undertaken to comply with the provisions of the Act, the DP Regulations and such other guidelines/ instructions which may be announced by SEBI from time to time. I also note that KSBL vide its letter dated April 30, 2005 had inter alia given the following undertaking to NSDL. "On completion of the transfer, all assets, liabilities, rights and obligations pertaining to DP business will transfer from KCL to KSBL." 8.3. In the aforesaid application (Form E), KSBL had inter alia given the details of the directors and the share holding pattern of KCL vis a vis KSBL. The details of such information given by KSBL are given below:

a) Details of directors Name of the intermediary Name of the Directors KCL

*Common shareholders 8.4. From the above table it can be seen that KCL and KSBL were having certain common directors and shareholders at the time of the transfer of business undertaking. Further, the shareholders specified at serial nos. 1 to 9 were common to both KCL and KSBL and they collectively hold 57% and 79% of the total capital of KCL and KSBL respectively. Therefore, even at the time of transfer of business undertaking of KCL to KSBL, both the entities were administered and controlled by the same management. In this context, I also note the reply of the DP to the show cause notice dated May 4, 2007, wherein it was stated that both KCL and KSBL were group companies. In view of the common control and management, KSBL is the alter ego of KCL. In any event KSBL is liable for all obligations of KCL as per the agreement with NSDL. At the time of hearing, the advocate appearing for DP did not press this point, while conceding that the liability of KSBL, in so far as it relates to the transfer of DP business from KCL would be restricted to that arising from DP business. In that view of the matter, the subsequent plea in the written submissions denying such liability besides citing the decision of the Hon'ble Bombay High Court in support smacks not only of a departure from the stand at the time of hearing but also betokens a desperate attempt to somehow wriggle out of the liability staring in the face. Such contradiction in the pleas raised by the DP seriously impairs the creditability of their defense. 8.5. Further, the DP in support of its contention relied upon the judgment of the Hon'ble Court of Bombay in the matter of SEBI vs. SKDC Consultants Ltd. I
note that the facts of the said case and the present case are different and can not be compared on equal footing. In the said case, SKDC Consultants Ltd. which was incorporated in the year 1998 entered into a Memorandum of Understanding with the proprietrix of Shree Krishna Data Center and it had subsequently took over the business of Shree Krishna Data Center as a going concern with effect from April 1, 1998. Subsequently, in the wake of certain violations relating to public issue of shares which took place in the month of November / December 1995, SEBI ordered adjudication proceedings against SKDC consultants Ltd. and the adjudicating officer imposed a penalty against SKDC Consultants Ltd. The said order of the adjudicating officer was set aside by the SAT inter alia on the gound that SKDC Consultants Ltd. was a distinct legal personality from Shree Krishna Data Center. In the said case, the said Shree Krishna Data Center was owned by the sole proprietrix and she was only one of the seven subscribers to the Memorandum of Association and only one of the first directors out of the four directors of SKDC Consultants Ltd. According to SAT, the same was not sufficient to hold that Shree Krishna Data Center and SKDC Consultants Ltd. were one and the same entity for all purposes. The above proposition of SAT was upheld by the Hon'ble High Court of Bombay in the matter SEBI vs. SKDC Consultants Ltd. However,
in the present case, both the entities [transferor (KCL) and the transferee (KSBL)] were under the same management and control and continued to be so at the time transfer of business undertaking. As per the shareholding pattern of both the entities (as given by KSBL), the common shareholders were holding 57% and 79% of the total capital of KCL and KSBL respectively. In such circumstances, the DP can not contend that KSBL is not liable for the violations of KCL. The presence of common directors and shareholders (with majority of the shareholding) serves to demonstrate unity of control and in that view the cited case is totally irrelevant so far as the facts of the instant case are concerned. 8.6. In view of the above coupled with the undertaking given by KSBL to NSDL to takeover inter alia the rights and obligations pertaining to Depository business of KCL, I am unable to accept the contention of the DP that SEBI cannot take action against the DP for the violations of KCL and accordingly the same is rejected. 8.7. I further note that, such a plea does not brook countenance, as any entity arraigned for market misfeasance could seek easy exculpation and avoid punishment through such subterfuges by transferring the business to another group entity. 8.8. In addition to the above, I note that the DP had not taken the aforesaid plea either before the Hon'ble High Court of Andhra Pradesh or before the SAT wherein it had challenged the interim order of SEBI. Therefore, the said contention of the DP which even otherwise is not acceptable cannot be entertained at this belated stage. 8.9. In view of the fact that both the intermediaries were under the same management and the business undertaking of KCL was transferred to KSBL as per their request, I am unable to accept the contention of DP that it is not laible for the alleged violations committed by KCL. 8.10. The DP has further taken an objection that SEBI (Chairman or the Whole Time Member) can not consider any fresh allegations (which were not considered by the Enquiry Officer) based on new materials. It has been further contended that SEBI is duty bound to pass order based on the findings in the Enquiry Report. In this context, the DP has claimed that the Authority can not travel beyond the Enquiry Report and what was considered therein. The DP has further contended that the show cause notice was merely a formality to show the procedural fairness as the Whole Time Member has categorically concluded that the prohibition of 18 months should be enhanced to 3 years. The DP clarified that the Authority had already prejudged the matter and therefore there was no scope for any effective representation. The DP further asserted that the suo moto finding of violation of law and quantification of penalty even before the hearing the defense was in violation of principles of natural justice. In addition to the above, the DP has contended that the authority can not enhance the penalty which was recommended by the Enquiry Officer.

8.11. The DP contended that SEBI could not travel beyond the Enquiry Report in the context of 37 bank account opening forms of Smt. Roopalben Panchal with Indian Overseas Bank, Thaltej Branch, Ahmedabad. I note that in the show cause notice dated May 4, 2007 it has been inter alia mentioned "Your kind attention is drawn to pages 54-55 (paras 11.3.3 and 11.3.4) of the enquiry report regarding the introduction of 37 savings bank accounts of Roopal Panchal to the Indian Overseas Bank (IOB), Thaltej Branch, Ahmedabad. IOB vide its letter dated March 4, 2006 had enclosed copies of the sample bank account opening forms of Roopal Panchal. Out of these, copies of the bank account opening forms in respect of account numbers 12004, 12140, 12149 and 12150 are enclosed as Annexure- 1. Various observations regarding the said bank accounts and the manner in which the demat accounts in names of persons figuring in the last attached with each such account were opened are enclosed as Annexure-2". 8.12. On a perusal of the said show cause notice, it can be seen that no fresh allegations are leveled against the DP and the observation mentioned therein was only an extension of the findings of the Enquiry Officer (para 11.3.3 and 11.3.4 of the Enquiry Report). Further the Enquiry Officer in his report had discussed certain instances (9 accounts) out of the said 37 bank accounts. The Enquiry Officer had also mentioned the letter dated March 4, 2006 received from the Indian Overseas Bank, Thaltej Branch, Ahmedabad. The contention that the said letter suffers from factual inconsistencies is not correct in view of the following discussion. 8.13. I note that the above letter listed out (by way of annexure) 37 savings account nos. and the names of the said savings accounts. The said letter specified that to the said 37 bank accounts which were introduced by the DP, 50 additional names were added and the said names were attached in a separate sheet with the respective account opening form. Therefore, the contention of the DP that there were inconsistencies/ contradictions in the letter of IOB dated March 04, 2006 can not be accepted. The Enquiry Officer had given his findings on the said issues in paras 11.3.3 and 11.3.4 of the Enquiry Report. The Enquiry Officer had discussed some of the accounts out of the said 37 accounts on an illustrative basis. In a case of this magnitude, it would be well neigh impossible in an order to deal with all the afferent accounts (about 50, 000 acccounts) with all their devious features. Accordingly, typical samples are taken for detailed examination. The same would not mean that the evidences available in other afferent accounts are shut out. As the modus of operandi in all the above 37 bank accounts were similar, the Enquiry Officer considered it appropriate to discuss about certain specific instances. The observations of the Enquiry Officer in respect of certain bank accounts opening forms (by way of illustration) can not by any stretch of imagination would lead to a conclusion that other bank accounts are out side the purview of the enquiry proceedings against the DP. 8.14. In addition to the above, the DP in its appeal memorandum (Appeal No. 92 of 2006) inter alia stated ".... The Respondent has not provided any proof for the introduction as stated in the impugned Order at para 6.35. The Appellant will be in a position to explain only on receipt of the documents relied upon by the Respondent to arrive at the said observation. It is stated tat the Appellant had not introduced the said 50 clients to IOB Thaltej. The Appellant had only certified, pursuant to the request of IPO sub broker, that the said 50 clients had demat account with the Appellant. It is submitted that all the said 50 clients had, as per Appellant's records, bank accounts with BhOB. Therefore the certification given by the Appellant was for existence of demat account as sought to be suggested." The aforesaid ground taken by the DP before SAT was nothing but an admission in respect of its role in certifying the additional 50 names in the said 37 accounts. Further, KSBL in its capacity as a Broker in the reply dated May 19, 2007 stated "simply because its employees had introduced the accounts and perhaps put the address or stamp of the company on the forms, it cannot be concluded that the company was aware of the activities of the employees." The said submission would fortify the fact that Karvy actively participated in the introduction of bank accounts of Smt Roopalben Panchal and the other additional 50 names who were nothing but fictitious. Such contradiction in the pleas raised by Karvy Group (before SAT and before SEBI) seriously impairs the credibility of their defence.

8.15. Further, SEBI in its orders dated April 27, 2006 and May 26, 2006, prima facie found that the DP had introduced the bank accounts of certain groups and facilitated the entire process starting from making IPO applications for them after collecting pay orders from the bank, arranging finance for them till collecting and distributing their refund orders. Therefore, the reference of 37 bank accounts with additional 50 names in the show cause notice was based on the documents which were already considered at the time of passing the orders of SEBI dated April 27, 2006 and May 26, 2006, documents which were provided to the Karvy Group at the time of the appeal before SAT and in the present enquiry proceedings. Therefore, the contention of the DP that the documents pertaining to 50 additional names attached to the Bank account introduction form of Smt Roopalben Panchal were not considered by the Enquiry Officer is not correct and the same is rejected. 8.16. Further, I note that regulation 13 (2) of the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 empowers the Chairman or the Member, as the case may be to consider the Enquiry Report and to issue a show cause notice, as to why action as it considers appropriate should not be taken. Thus, the powers of the Chairman/ Member while considering the Enquiry Report is wide and he can take any action as it considers appropriate. Further, in terms of regulation 13(4) of the Enquiry Regulations, the Chairman or Member, upon the receipt of enquiry report is empowered to "pass such order as he may deem fit" after considering the reply filed by the intermediary concerned. The expression "pass such order as he may deem fit" has to be interpreted broadly and the power of SEBI is not restricted to imposing penalty as recommended by the Enquiry Officer. If the competent authority has the jurisdiction to pass any order in reference to a specific case called for by it as it thinks fit, obviously it can come to a different conclusion/ finding from the one to which the Enquiry Officer had arrived, on the same set of facts. Obviously the competent authority can also impose a different penalty from that was recommended by the Enquiry Officer. It is settled that the question of imposing punishment can only arise after enquiry is made and the report of the Enquiry Officer is received. The competent authority may agree with the report or may differ, either wholly or partially, from the conclusions recorded in the report. i.e neither the conclusion on the evidence nor the punishment which the enquiring authority may regard as appropriate is binding upon the punishing authority.

8.17. Further, the contention of the DP that the authority has concluded to enhance the prohibition from 18 months to 3 years is also not acceptable. The proposal to enhance the prohibition from 18 months to 3 years (as mentioned in the show cause notice) was only a prima facie/tentative observation after considering the Enquiry Report and the materials available on record. Further, the penalty was not enhanced by SEBI and the object of the show cause notice dated May 04, 2007 was to give an opportunity to the DP to submit its case on the proposed enhancement in penalty. The DP was also granted an opportunity of hearing on various dates. The said opportunities were provided by SEBI to the DP towards the compliance of the principles of natural justice, so that the DP could make its submission/explanation, if any, against the proposal to enhance the penalty. The penalty has only been indicative and not finally determined and therefore, no prejudice has been caused to the DP. 8.18. Further, the contention of the DP that, if the Whole Time Member had categorically concluded that the prohibition of 18 months should be enhanced to 3 years, then the show cause notice was merely a formality to show the procedural fairness is not acceptable. I wish to add that the penalty was not increased vide the show cause notice and the proposal to enhance the penalty was only a tentative decision. Communicating the tentative decision in no way would cause prejudice to the party. On the other hand, if at all the disciplinary authority gave detailed tentative decision before seeking explanation from the appellants, it would enable the party to give an effective representation and the principles of natural justice are thus fully complied with.

8.19. As discussed above, the findings of the Enquiry Officer are only his opinion on the materials, but such findings are not binding on the decision making authority and the latter can come to its own conclusion. That apart, the issuance of show cause notice provides an opportunity to submit its reply in relation to the proposed enhanced penalty and no prejudice is caused by the same. In view of the above, I am unable to accept the above contention of the DP.

9. Consideration of Factual Issues 9.1. In order to consider the issues as above, I now propose to examine the role of Karvy group companies in the entire process of IPO beginning with the opening of afferent dematerialized accounts, introduction of bank accounts of key operators, afferent accounts and the addition of fictitious / benami names to the bank accounts for availing IPO finance, providing of IPO finance to the fictitious / benami entities through the medium of key operators, bidding of the application forms of fictitious / benami entities without the corresponding payment (100% IPO margin), issue of consolidated refund cheques, issue of directions for appropriation of refund money and execution of synchronized off-market transfers including issue and processing of DIS.

9.2. The manner of opening bank accounts and dematerialized accounts clearly demonstrates Karvy's control and their knowledge of the fictitious / benami nature of these accounts. In effect, Karvy was dealing only with the key operators and not with anyone else. The IPO process, IPO financing, RTGS transfer to the escrow account, issuance of consolidated refund order and issues relating to DIS, the discussion of which follow hereinunder, further strengthen the above finding with tell tale strands of Karvy's control with full knowledge at each and every stage of IPO process. They constitute additional material evidences to confirm the obvious as arising from the discussion relating to bank accounts and demat accounts elsewhere in the order. 9.3. Even a single instance of incontrovertible data establishing Karvy's active involvement, anywhere in the chain, in abusing the allotment process is good enough and in that view, the overwhelming body of additional material evidences only serves to exacerbate the gravity of such misconduct. SCHEMATIC REPRESENTATION OF GAMUT OF KARVY'S OPERATIONS (Editor: The text of the vernacular matter has not been reproduced. required.)

9.4. Introduction of Bank Accounts by Karvy I note that during June 2003 when there were public issues of many premier companies such as Maruti Udyog Ltd, UCO Bank, Vijaya Bank etc., Karvy had presented to BhOB an idea paper and a process flow. As per the process flow, the IPO applications would be filled in by the investor and a cheque/DD in favour of the Bank towards the margin amount shall be deposited. The investor would need to open the Demat account with Karvy who would place a lien on the shares deposited into the investor's account until the investor clears the loan with the Bank. The client would deposit the payment instrument and bid form with the Bank along with the account opening document and documents for the loan. The Bank would ensure that the Savings Bank (SB) account opened by the Bank is mentioned in the relevant column in the bid form as the Bank account to which the refund is to be sent. The Bank would issue Pay order for the amount of the application by debiting loan account and margin money of the respective applicants. If the investor is not allotted shares against the IPO application, refunds are made to investor by the registrar through the Bank and the refund order credited to the account, after liquidating the loan. In case of allotment, the investor is required to bring in the required amount if there is shortfall and fulfill the obligation with the Bank along with the interest after which the lien is released by the Bank and informed to the DP for release of Bank's lien on the demat account. 9.5. A perusal of the process flow envisaged for IPO funding as spelt out by Karvy shows that there was a specific assuring clause to the effect that there were no chances for cases such as benami applications, multiple applications, fraudulent investors etc. thereby providing comfort to the bank. 9.6. Pursuant to the arrangement, it is seen that Karvy had introduced numerous bank account holders to BhOB, Ahmedabad branch. In what is seen as first of such bank accounts introduced by Karvy to BhOB Ahmedabad, there is a set of account with numbers starting with '50795'. The observations on these bank accounts with BhOB Ahmedabad branch beginning with the number '50795' is given below: 9.7. Introduction of bank account no. 50795 with BhOB Ahmedabad by Karvy

It was observed that following bank accounts starting with 50795 were held in the name of Devangi Dipak Panchal as first holder and certified copies of the following bank accounts were submitted. These accounts were introduced by Karvy Securities Ltd / Karvy Investor Services Ltd. These were opened for the purpose of availing finance in the IPO of Maruti Udyog Ltd on June 17, 2003 and closed on October 27, 2003:

1. 50795/1 to 50795/2

2. 50795/5

3. 50795/14,

4. 50795/16

5. 50795/18 to 50795/24

6. 50795/26 to 50795/60

7. 50795/ 62 to 50795/ 64

8. 50795/ 67 to 50795/127

9. 50795/130 to 50795/131

10. 50795/137 to 50795/150

11. 50795/152 to 50795/153 9.8. On a random selection basis, the bank account opening form pertaining to SB account no 50795 / 081 was examined. It is seen that this account was initially opened in the name of Devangi D Panchal on the introduction of Karvy Securities Ltd. Further, it is observed that the names of Shah Manjula K and Pritesh K Shah were added to this account on the introduction of Karvy Investors Services Ltd. Similarly, a perusal of the bank account opening forms of SB account no 50795 / 082 revealed that this account was initially opened in the name of Devangi D Panchal on the introduction of Karvy Securities Ltd. Further, it is observed that the names of Pravin K Shah and Bhagwanti P Shah were added to this account on the introduction of Karvy Investors Services Ltd. Similar pattern of addition of names to the existing accounts is observed with regard to many of the above accounts. This indicates that as early as June 2003 Karvy group was indulging in the practice of introducing names at will which were added to the bank accounts of the key operators. The same script continues later, albeit on a larger canvass. 9.9. It was further observed that the above banks accounts were used for opening afferent demat accounts with Karvy DP in the month of June 2003. The details of such afferent demat accounts are mentioned in the table below.

Sr. No.

Demat Client ID

Name of client

Address

Bank acct no

Bank

Date of opening demat account Date of closing demat account

1.

12312738

PANCHAL DIPAK J

402-403 SHASHWAT

50795/60

BHOB, Ahmedabad

6/27/2003

11/15/2005

2.

12312746

PANCHAL DINESH J

402-403 SHASHWAT

50795/60

BHOB, Ahmedabad

6/27/2003

11/15/2005

3.

12312754

PANCHAL DILIP J

402-403 SHASHWAT

50795/60

BHOB, Ahmedabad

6/27/2003

11/15/2005

4.

12312762

PANCHAL DEVANGI D

402-403 SHASHWAT

50795/77

BHOB, Ahmedabad

6/27/2003

11/15/2005

5.

12312779

PANCHAL ROOPA D

402-403 SHASHWAT

50795/60

BHOB, Ahmedabad

6/27/2003

11/15/2005

6.

12312787

PANCHAL DHRUV D

402-403 SHASHWAT

50795/61

BHOB, Ahmedabad

6/27/2003

11/15/2005

7.

12312795

PANCHAL DEVAL D

402-403 SHASHWAT

50795/61

BHOB, Ahmedabad

6/27/2003

11/15/2005

8.

12312809

PANCHAL DEVESH D

402-403 SHASHWAT

50795/61

BHOB, Ahmedabad

6/27/2003

11/15/2005

9.

12312818

PANCHAL D

402-403 SHASHWAT

50795/62

BHOB, Ahmedabad

6/27/2003

11/15/2005

10.

12312826

PANCHAL MOXI D

402-403 SHASHWAT

50795/67

BHOB, Ahmedabad

6/27/2003

11/15/2005

11.

12312834

PANCHAL RANCHHODLAL N 402-403 SHASHWAT

50795/67

BHOB, Ahmedabad

6/27/2003

11/15/2005

12.

12312842

PAUCHAL PRAMILABEN R 402-403 SHASHWAT

50795/63

BHOB, Ahmedabad

6/27/2003

11/15/2005

13.

12312859

PANCHAL NARMADABEN M 402-403 SHASHWAT

50795/63

BHOB, Ahmedabad

6/27/2003

11/15/2005

14.

12312867

PANCHAL BHARGAV R

402-403 SHASHWAT

50795/63

BHOB, Ahmedabad

6/27/2003

11/15/2005

15.

12312875

PANCHAL HIMA B

402-403 SHASHWAT

50795/64

BHOB, Ahmedabad

6/27/2003

11/15/2005

16.

12312883

PANCHAL MALAV B

402-403 SHASHWAT

50795/64

BHOB, Ahmedabad

6/27/2003

11/15/2005

17.

12312890

PANCHAL SRINAND B

402-403 SHASHWAT

50795/64

BHOB, Ahmedabad

6/27/2003

11/15/2005

18.

12312906

PANCHAL HETA U

402-403 SHASHWAT

50795/65

BHOB, Ahmedabad

6/27/2003

11/15/2005

19.

12312914

PANCHAL KIRITBHAI R 402-403 SHASHWAT

50795/65

BHOB, Ahmedabad

6/27/2003

11/15/2005

20.

12312922

PANCHAL CHHAYABEN K 402-403 SHASHWAT

50795/65

BHOB, Ahmedabad

6/27/2003

11/15/2005

21.

12312939

PANCHAL NARESH N

402-403 SHASHWAT

50795/66

BHOB, Ahmedabad

6/27/2003

11/15/2005

22.

12312947

PANCHAL ROOPAL N

402-403 SHASHWAT

50795/66

BHOB, Ahmedabad

6/27/2003

11/15/2005

23.

12312963

PANCHAL AYUSHI N

402-403 SHASHWAT

50795/67

BHOB, Ahmedabad

6/27/2003

11/15/2005

24.

12312970

PANCHAL

402-403

50795/67

BHOB,

6/27/2003

11/15/2005

NATVARLAL

SHASHWAT

Ahmedabad

25.

12312989

PANCHAL RAMABEN N

402-403 SHASHWAT

50795/67

BHOB, Ahmedabad

6/27/2003

11/15/2005

26.

12312998

KHALAS VIJAY G

402-403 SHASHWAT

50795/68

BHOB, Ahmedabad

6/27/2003

11/15/2005

27.

12313005

KHALAS SANJAY G

402-403 SHASHWAT

50795/68

BHOB, Ahmedabad

6/27/2003

11/15/2005

28.

12313013

KHALAS SANDIP G

402-403 SHASHWAT

50795/68

BHOB, Ahmedabad

6/27/2003

11/15/2005

29.

12313039

KHALAS GOVINDBHAI N 402-403 SHASHWAT

50795/69

BHOB, Ahmedabad

6/27/2003

11/15/2005

30.

12313048

MODI NIKUNJ B

402-403 SHASHWAT

50795/69

BHOB, Ahmedabad

6/27/2003

11/15/2005

31.

12313056

MODI HETAL N

402-403 SHASHWAT

50795/70

BHOB, Ahmedabad

6/27/2003

11/15/2005

32.

12313064

MODI MADHU BALA B

402-403 SHASHWAT

50795/70

BHOB, Ahmedabad

6/30/2003

11/15/2005

33.

12313072

MODI BABULAL S

402-403 SHASHWAT

50795/70

BHOB, Ahmedabad

6/27/2003

11/15/2005

34.

12313089

PARMAR NATVARLAL N

402-403 SHASHWAT

50795/71

BHOB, Ahmedabad

6/27/2003

11/15/2005

35.

12313097

PARMAR USHABEN N

402-403 SHASHWAT

50795/71

BHOB, Ahmedabad

6/27/2003

11/15/2005

36.

12313100

PARMAR KIRITBHAI N

402-403 SHASHWAT

50795/71

BHOB, Ahmedabad

6/27/2003

11/15/2005

37.

12313119

PARMAR RAMILABEN K

402-403 SHASHWAT

50795/72

BHOB, Ahmedabad

6/27/2003

11/15/2005

38.

12313128

PARMAR AMIT K

402-403 SHASHWAT

50795/72

BHOB, Ahmedabad

6/27/2003

11/15/2005

39.

12313136

PARMAR MONIKA K

402-403 SHASHWAT

50795/72

BHOB, Ahmedabad

6/27/2003

11/15/2005

40.

12313144

PARMAR SONIKA K

402-403 SHASHWAT

50795/73

BHOB, Ahmedabad

6/27/2003

11/15/2005

41.

12313152

PARMAR YUVRAJ K

402-403 SHASHWAT

50795/73

BHOB, Ahmedabad

6/27/2003

11/15/2005

42.

12313169

PARMAR ASHVIN N

402-403 SHASHWAT

50795/73

BHOB, Ahmedabad

6/27/2003

11/15/2005

43.

12313177

PARMAR BHANUBEN A

402-403 SHASHWAT

50795/74

BHOB, Ahmedabad

6/27/2003

11/15/2005

44.

12313185

PARMAR PRIYANSHU A

402-403 SHASHWAT

50795/74

BHOB, Ahmedabad

6/27/2003

11/15/2005

45.

12313193

PARMAR MADHUSUDAN M 402-403 SHASHWAT

50795/74

BHOB, Ahmedabad

6/27/2003

11/15/2005

46.

12313208

PARMAR KARTIK N

402-403 SHASHWAT

50795/75

BHOB, Ahmedabad

6/27/2003

11/15/2005

47.

12313216

PARMAR DONIKA N

402-403 SHASHWAT

50795/75

BHOB, Ahmedabad

6/27/2003

11/15/2005

48.

12313224

PARMAR DEVENDRABHAI K 402-403 SHASHWAT

50795/75

BHOB, Ahmedabad

6/27/2003

11/15/2005

49.

12313232

RAVAL KRISHNABEN D

402-403 SHASHWAT

50795/76

BHOB, Ahmedabad

6/30/2003

11/15/2005

50.

12313249

RAVAL VISHAKHA D

402-403 SHASHWAT

50795/77

BHOB, Ahmedabad

6/30/2003

11/15/2005

51.

12313257

RAVAL KOMAL D

402-403 SHASHWAT

50795\77

BHOB, Ahmedabad

6/30/2003

11/15/2005

52.

12313265

RAVAL DIPAK N

402-403 SHASHWAT

50795\77

BHOB, Ahmedabad

6/30/2003

11/15/2005

53.

12313273

SHAH LATA D

402-403 SHASHWAT

50795\78

BHOB, Ahmedabad

6/30/2003

11/15/2005

54.

12313280

SHAH NEELAM D

402-403 SHASHWAT

50795\78

BHOB, Ahmedabad

6/30/2003

11/15/2005

55.

12313299

SHAH SONAM D

402-403 SHASHWAT

50795\78

BHOB, Ahmedabad

6/30/2003

11/15/2005

56.

12313304

SHAH ZEEL D

402-403 SHASHWAT

50795\79

BHOB, Ahmedabad

6/30/2003

11/15/2005

57.

12313312

SHAH BHARAT K

402-403 SHASHWAT

50795\79

BHOB, Ahmedabad

6/30/2003

11/15/2005

58.

12313329

SHAH BHAGVANTI B

402-403 SHASHWAT

50795\79

BHOB, Ahmedabad

6/30/2003

11/15/2005

59.

12313337

SHAH NIPA B

402-403 SHASHWAT

50795\80

BHOB, Ahmedabad

6/30/2003

11/15/2005

60.

12313345

SHAH NIHIR B

402-403 SHASHWAT

50795\80

BHOB, Ahmedabad

6/30/2003

11/15/2005

61.

12313353

SHAH MUNJAL B

402-403 SHASHWAT

50795\80

BHOB, Ahmedabad

6/30/2003

11/15/2005

62.

12313360

SHAH KANTILAL K

402-403 SHASHWAT

50795\81

BHOB, Ahmedabad

6/30/2003

11/15/2005

63.

12313379

SHAH MANJULA K

402-403 SHASHWAT

50795\81

BHOB, Ahmedabad

6/30/2003

11/15/2005

64.

12313388

SHAH PRITESH K

402-403 SHASHWAT

50795\81

BHOB, Ahmedabad

6/30/2003

11/15/2005

65.

12313396

SHAH VISHAL K

402-403 SHASHWAT

50795\82

BHOB, Ahmedabad

6/30/2003

11/15/2005

66.

12313407

SHAH PRAVIN K

402-403 SHASHWAT

50795\82

BHOB, Ahmedabad

6/30/2003

11/15/2005

67.

12313415

SHAH BHAGWANTI P

402-403 SHASHWAT

50795\82

BHOB, Ahmedabad

6/30/2003

11/15/2005

68.

12313423

SHAH SURBHI P

402-403 SHASHWAT

50795\83

BHOB, Ahmedabad

6/30/2003

11/15/2005

69.

12313430

SHAHLALU P

402-403 SHASHWAT

50795\83

BHOB, Ahmedabad

6/30/2003

11/15/2005

70.

12313449

SHAH SHAILESH N

402-403 SHASHWAT

50795\83

BHOB, Ahmedabad

6/30/2003

11/15/2005

71.

12313458

SHAH JAGRUTI S

402-403 SHASHWAT

50795\84

BHOB, Ahmedabad

6/30/2003

11/15/2005

72.

12313466

SHAH ANERI S

402-403 SHASHWAT

50795\84

BHOB, Ahmedabad

6/30/2003

11/15/2005

73.

12313474

SHAH AYUSHI S

402-403 SHASHWAT

50795\84

BHOB, Ahmedabad

6/30/2003

11/15/2005

74.

12313482

SHAH ROHIT N

402-403 SHASHWAT

50795\85

BHOB, Ahmedabad

6/30/2003

11/15/2005

75.

12313499

SHAH ANJU R

402-403 SHASHWAT

50795\85

BHOB, Ahmedabad

6/30/2003

11/15/2005

76.

12313503

SHAH ROOPA R

402-403 SHASHWAT

50795\85

BHOB, Ahmedabad

6/30/2003

11/15/2005

77.

12313510

SHAH POOJA R

402-403 SHASHWAT

50795\86

BHOB, Ahmedabad

6/30/2003

11/15/2005

78.

12313529

SHAH NANCHAND K

402-403 SHASHWAT

50795\86

BHOB, Ahmedabad

6/30/2003

11/15/2005

79.

12313538

SHAH KUSUM N

402-403 SHASHWAT

50795\86

BHOB, Ahmedabad

6/30/2003

11/15/2005

80.

12313546

SHAH BHARTI V

402-403 SHASHWAT

50795\87

BHOB, Ahmedabad

6/30/2003

11/15/2005

81.

12313554

SHAH VINOD T

402-403 SHASHWAT

50795\87

BHOB, Ahmedabad

6/30/2003

11/15/2005

82.

12313562

SHAH SANDIP V

402-403 SHASHWAT

50795\87

BHOB, Ahmedabad

6/30/2003

11/15/2005

83.

12313579

SHAH JITENDRA P

402-403 SHASHWAT

50795\88

BHOB, Ahmedabad

6/30/2003

11/15/2005

84.

12313587

SHAH SANGEETA J

402-403 SHASHWAT

50795\88

BHOB, Ahmedabad

6/30/2003

11/15/2005

85.

12313595

SHAH DHIREN J

402-403 SHASHWAT

50795\88

BHOB, Ahmedabad

6/30/2003

11/15/2005

86.

12313609

SHAH MANEK J

402-403 SHASHWAT

50795\89

BHOB, Ahmedabad

6/30/2003

11/15/2005

87.

12313618

SHAH MOHAN M

402-403 SHASHWAT

50795\89

BHOB, Ahmedabad

6/30/2003

11/15/2005

88.

12313626

SHAH SOBHNA M

402-403 SHASHWAT

50795\89

BHOB, Ahmedabad

6/30/2003

11/15/2005

89.

12313634

SHAH SUNITA M

402-403 SHASHWAT

50795\90

BHOB, Ahmedabad

6/30/2003

11/15/2005

90.

12313642

SHAH SURBHI M

402-403 SHASHWAT

50795\90

BHOB, Ahmedabad

6/30/2003

11/15/2005

91.

12313659

SHAH NIMESH M

402-403 SHASHWAT

50795\90

BHOB, Ahmedabad

6/30/2003

11/15/2005

92.

12313667

SHAH DEVICHAND M

402-403 SHASHWAT

50795\91

BHOB, Ahmedabad

6/30/2003

11/15/2005

93.

12313675

SHAH LEELA D

402-403 SHASHWAT

50795\91

BHOB, Ahmedabad

6/30/2003

11/15/2005

94.

12313683

SHAH MAHAVIR D

402-403 SHASHWAT

50795\91

BHOB, Ahmedabad

6/30/2003

11/15/2005

95.

12313690

SHAH MAMTA D

402-403 SHASHWAT

50795\92

BHOB, Ahmedabad

6/30/2003

11/15/2005

96.

12313706

SHAH AMBICA D

402-403 SHASHWAT

50795\92

BHOB, Ahmedabad

6/30/2003

11/15/2005

97.

12313714

SHAH PAWAN D

402-403 SHASHWAT

50795\92

BHOB, Ahmedabad

6/30/2003

11/15/2005

98.

12313722

SHAH NIKITA D

402-403 SHASHWAT

50795/93

BHOB, Ahmedabad

6/30/2003

11/15/2005

99.

12313747

DINESH PANCHAL

402-403 SHASHWAT

50795/26

BHOB, Ahmedabad

6/27/2003

11/15/2005

100.

12313755

DILIP PANCHAL

402-403 SHASHWAT

50795/26

BHOB, Ahmedabad

6/27/2003

11/15/2005

101.

12313763

DEVANGI PANCHAL

402-403 SHASHWAT

50795/44

BHOB, Ahmedabad

6/27/2003

11/15/2005

102.

12313770

ROOPA PANCHAL

402-403 SHASHWAT

50795/26

BHOB, Ahmedabad

6/27/2003

11/15/2005

103.

12313789

DHRUV PANCHAL

402-403 SHASHWAT

50795/27

BHOB, Ahmedabad

6/27/2003

11/15/2005

104.

12313798

DEVAL PANCHAL

402-403 SHASHWAT

50795/27

BHOB, Ahmedabad

6/27/2003

11/15/2005

105.

12313802

DEVESH PANCHAL

402-403 SHASHWAT

50795/27

BHOB, Ahmedabad

6/27/2003

11/15/2005

106.

12313819

PANCHAL

402-403 SHASHWAT

50795/28

BHOB, Ahmedabad

6/27/2003

11/15/2005

107.

12313827

MOXI PANCHAL

402-403 SHASHWAT

50795/28

BHOB, Ahmedabad

6/27/2003

11/15/2005

108.

12313835

RANCHHODLAL PANCHAL 402-403 SHASHWAT

50795/28

BHOB, Ahmedabad

6/27/2003

11/15/2005

109.

12313843

PRAMILABEN PANCHAL

402-403 SHASHWAT

50795/29

BHOB, Ahmedabad

6/27/2003

11/15/2005

110.

12313850

NARMADABEN PANCHAL

402-403 SHASHWAT

50795/29

BHOB, Ahmedabad

6/27/2003

11/15/2005

111.

12313869

BHARGAV PANCHAL

402-403 SHASHWAT

50795/29

BHOB, Ahmedabad

6/27/2003

11/15/2005

112.

12313878

HINA PANCHAL

402-403 SHASHWAT

50795/30

BHOB, Ahmedabad

6/27/2003

11/15/2005

113.

12313886

MALAV PANCHAL

402-403 SHASHWAT

50795/30

BHOB, Ahmedabad

6/27/2003

11/15/2005

114.

12313894

SRINAND PANCHAL

402-403 SHASHWAT

50795/30

BHOB, Ahmedabad

6/27/2003

11/15/2005

115.

12313909

HETA PANCHAL

402-403 SHASHWAT

50795/31

BHOB, Ahmedabad

6/27/2003

11/15/2005

116.

12313917

KIRITBHAI PANCHAL

402-403 SHASHWAT

50795/31

BHOB, Ahmedabad

6/27/2003

11/15/2005

117.

12313925

CHHAYABEN PANCHAL

402-403 SHASHWAT

50795/31

BHOB, Ahmedabad

6/27/2003

11/15/2005

118.

12313933

NARESH PANCHAL

402-403 SHASHWAT

50795/32

BHOB, Ahmedabad

6/27/2003

NA

119.

12313940

ROOPAL PANCHAL

402-403 SHASHWAT

50795/32

BHOB, Ahmedabad

6/27/2003

NA

120.

12313959

ARJAV PANCHAL

402-403 SHASHWAT

50795/32

BHOB, Ahmedabad

6/27/2003

1/5/2006

121.

12313968

AYUSHI PANCHAL

402-403 SHASHWAT

50795/33

BHOB, Ahmedabad

6/27/2003

1/4/2006

122.

12313976

NATVARLAL PANCHAL

402-403 SHASHWAT

50795/33

BHOB, Ahmedabad

6/27/2003

11/15/2005

123.

12313984

RAMABEN PANCHAL

402-403 SHASHWAT

50795/33

BHOB, Ahmedabad

6/27/2003

11/15/2005

124.

12313992

VIJAY KHALAS

402-403 SHASHWAT

50795/34

BHOB, Ahmedabad

6/27/2003

11/15/2005

125.

12314008

SANJAY KHALAS

402-403 SHASHWAT

50795/31

BHOB, Ahmedabad

6/27/2003

11/15/2005

126.

12314016

SANDIP KHALAS

402-403 SHASHWAT

50795/34

BHOB, Ahmedabad

6/27/2003

11/15/2005

127.

12314024

RAMILABEN KHALAS

402-403 SHASHWAT

50795/35

BHOB, Ahmedabad

6/27/2003

11/15/2005

128.

12314032

GOVINDBHAI KHALAS

402-403 SHASHWAT

50795/35

BHOB, Ahmedabad

6/27/2003

11/15/2005

129.

12314049

NIKUNJ MODI

402-403 SHASHWAT

50795/35

BHOB, Ahmedabad

6/27/2003

11/15/2005

130.

12314057

HETAL MODI

402-403 SHASHWAT

50795/36

BHOB, Ahmedabad

6/27/2003

11/15/2005

131.

12314065

MADHUBALA MODI

402-403 SHASHWAT

50795/36

BHOB, Ahmedabad

6/27/2003

11/15/2005

132.

12314073

BABUL AL MODI

402-403 SHASHWAT

50795/36

BHOB, Ahmedabad

6/27/2003

11/15/2005

133.

12314080

NATVARLAL PARMAR

402-403 SHASHWAT

50795/37

BHOB, Ahmedabad

6/27/2003

11/15/2005

134.

12314099

USHABEN PARMAR

402-403 SHASHWAT

50795/37

BHOB, Ahmedabad

6/27/2003

11/15/2005

135.

12314104

KIRITBHAI PARMAR

402-403 SHASHWAT

50795/37

BHOB, Ahmedabad

6/27/2003

11/15/2005

136.

12314112

RAMILABEN PARMAR

402-403 SHASHWAT

50795/38

BHOB, Ahmedabad

6/27/2003

11/15/2005

137.

12314129

AMIT PARMAR

402-403 SHASHWAT

50795/38

BHOB, Ahmedabad

6/27/2003

11/15/2005

138.

12314137

MONIKA PARMAR

402-403 SHASHWAT

50795/38

BHOB, Ahmedabad

6/27/2003

11/15/2005

139.

12314145

SONIKA PARMAR

402-403 SHASHWAT

50795/39

BHOB, Ahmedabad

6/27/2003

11/15/2005

140.

12314153

YUVRAJ PARMAR

402-403 SHASHWAT

50795/39

BHOB, Ahmedabad

6/27/2003

11/15/2005

141.

12314160

ASHVINKUMAR PARMAR

402-403 SHASHWAT

50795/39

BHOB, Ahmedabad

6/27/2003

11/15/2005

142.

12314179

BHANUBEN PARMAR

402-403 SHASHWAT

50795/40

BHOB, Ahmedabad

6/27/2003

11/15/2005

143.

12314188

PRIYANSHU PARMAR

402-403 SHASHWAT

50795/40

BHOB, Ahmedabad

6/27/2003

11/15/2005

144.

12314196

MADHUSUDAN PARMAR

402-403 SHASHWAT

50795/40

BHOB, Ahmedabad

6/27/2003

11/15/2005

145.

12314207

KARTIK PARMAR

402-403 SHASHWAT

50795/41

BHOB, Ahmedabad

6/27/2003

11/15/2005

146.

12314215

DONIKA PARMAR

402-403 SHASHWAT

50795/41

BHOB, Ahmedabad

6/27/2003

11/15/2005

147.

12314223

DEVENBHAI RAVAL

402-403 SHASHWAT

50795/41

BHOB, Ahmedabad

6/27/2003

11/15/2005

148.

12314230

KRISHNABEN RAVAL

402-403 SHASHWAT

50795142

BHOB, Ahmedabad

6/27/2003

11/15/2005

149.

12314249

VISHAKHA RAVAL

402-403 SHASHWAT

50795/43

BHOB, Ahmedabad

6/27/2003

11/15/2005

150.

12314258

KOMAL RAVAL

402-403 SHASHWAT

50795/43

BHOB, Ahmedabad

6/27/2003

11/15/2005

151.

12314266

DIPAK SHAH

402-403 SHASHWAT

50795/43

BHOB, Ahmedabad

6/27/2003

11/15/2005

152.

12314274

LATA SHAH

402-403 SHASHWAT

50795/44

BHOB, Ahmedabad

6/27/2003

11/15/2005

153.

12314282

NEELAM SHAH

402-403 SHASHWAT

50795/44

BHOB, Ahmedabad

6/27/2003

11/15/2005

154.

12314299

SONAM SHAH

402-403 SHASHWAT

50795/44

BHOB, Ahmedabad

6/27/2003

11/15/2005

155.

12314303

ZEEL SHAH

402-403 SHASHWAT

50795/45

BHOB, Ahmedabad

6/27/2003

11/15/2005

156.

12314310

BHARAT SHAH

402-403 SHASHWAT

50795/45

BHOB, Ahmedabad

6/27/2003

11/15/2005

157.

12314329

BHAGVANTI SHAH

402-403 SHASHWAT

50795/45

BHOB, Ahmedabad

6/27/2003

11/15/2005

158.

12314338

NIPA SHAH

402-403 SHASHWAT

50795/46

BHOB, Ahmedabad

6/27/2003

11/15/2005

159.

12314346

NIHIR SHAH

402-403 SHASHWAT

50795/46

BHOB, Ahmedabad

6/27/2003

11/15/2005

160.

12314354

MUNJAL SHAH

402-403 SHASHWAT

50795/46

BHOB, Ahmedabad

6/27/2003

11/15/2005

161.

12314362

KANTILAL SHAH

402-403 SHASHWAT

50795/47

BHOB, Ahmedabad

6/27/2003

11/15/2005

162.

12314379

MANJULA SHAH

402-403 SHASHWAT

50795/47

BHOB, Ahmedabad

6/27/2003

11/15/2005

163.

12314387

PRITESH SHAH

402-403 SHASHWAT

50795/47

BHOB, Ahmedabad

6/27/2003

11/15/2005

164.

12314395

VISHAL SHAH

402-403 SHASHWAT

50795/48

BHOB, Ahmedabad

6/27/2003

11/15/2005

165.

12314409

PRAVIN SHAH

402-403 SHASHWAT

50795/48

BHOB, Ahmedabad

6/27/2003

11/15/2005

166.

12314418

BHAGWANTI SHAH

402-403 SHASHWAT

50795/48

BHOB, Ahmedabad

6/27/2003

11/15/2005

167.

12314426

SURBHI SHAH

402-403 SHASHWAT

50795/49

BHOB, Ahmedabad

6/27/2003

11/15/2005

168.

12314434

LALU SHAH

402-403 SHASHWAT

50795/49

BHOB, Ahmedabad

6/27/2003

11/15/2005

169.

12314442

SHAILESH SHAH

402-403 SHASHWAT

50795/49

BHOB, Ahmedabad

6/27/2003

11/15/2005

170.

12314459

JAGRUTI SHAH

402-403 SHASHWAT

50795/50

BHOB, Ahmedabad

6/27/2003

11/15/2005

171.

12314467

ANERI SHAH

402-403 SHASHWAT

50795/50

BHOB, Ahmedabad

6/27/2003

11/15/2005

172.

12314475

AYUSHI SHAH

402-403 SHASHWAT

50795/50

BHOB, Ahmedabad

6/27/2003

11/15/2005

173.

12314483

ROHIT SHAH

402-403 SHASHWAT

50795/51

BHOB, Ahmedabad

6/27/2003

11/15/2005

174.

12314490

ANJU SHAH

402-403 SHASHWAT

50795/51

BHOB, Ahmedabad

6/27/2003

11/15/2005

175.

12314506

ROOPA T SHAH

402-403 SHASHWAT

50795/51

BHOB, Ahmedabad

6/27/2003

11/15/2005

176.

12314514

POOJA SHAH

402-403 SHASHWAT

50795/52

BHOB, Ahmedabad

6/27/2003

11/15/2005

177.

12314522

NANCHAND SHAH

402-403 SHASHWAT

50795/52

BHOB, Ahmedabad

6/27/2003

11/15/2005

178.

12314539

KUSUM SHAH

402-403 SHASHWAT

50795/52

BHOB, Ahmedabad

6/27/2003

11/15/2005

179.

12314547

BHARTI SHAH

402-403 SHASHWAT

50795/53

BHOB, Ahmedabad

6/27/2003

11/15/2005

180.

12314555

VINOD SHAH

402-403 SHASHWAT

50795/53

BHOB, Ahmedabad

6/27/2003

11/15/2005

181.

12314563

SANDIP SHAH

402-403 SHASHWAT

50795/53

BHOB, Ahmedabad

6/27/2003

11/15/2005

182.

12314570

JITENDRA SHAH

402-403 SHASHWAT

50795/54

BHOB, Ahmedabad

6/27/2003

11/15/2005

183.

12314589

SANGEETA SHAH

402-403 SHASHWAT

50795/54

BHOB, Ahmedabad

6/27/2003

11/15/2005

184.

12314598

DHIREN SHAH

402-403 SHASHWAT

50795/54

BHOB, Ahmedabad

6/27/2003

11/15/2005

185.

12314602

MANEK SHAH

402-403 SHASHWAT

50795/55

BHOB, Ahmedabad

6/27/2003

11/15/2005

186.

12314619

MOHAN SHAH

402-403 SHASHWAT

50795/55

BHOB, Ahmedabad

6/27/2003

11/15/2005

187.

12314627

SOBHNA SHAH

402-403 SHASHWAT

50795/55

BHOB, Ahmedabad

6/27/2003

11/15/2005

188.

12314635

SUNITA SHAH

402-403 SHASHWAT

50795/56

BHOB, Ahmedabad

6/27/2003

11/15/2005

189.

12314643

SURBHI SHAH

402-403 SHASHWAT

50795/56

BHOB, Ahmedabad

6/27/2003

11/15/2005

190.

12314650

NIMESH SHAH

402-403 SHASHWAT

50795/56

BHOB, Ahmedabad

6/27/2003

11/15/2005

191.

12314669

DEVICHAND SHAH

402-403 SHASHWAT

50795/57

BHOB, Ahmedabad

6/27/2003

11/15/2005

192.

12314678

LEELA SHAH

402-403 SHASHWAT

50795/57

BHOB, Ahmedabad

6/27/2003

11/15/2005

193.

12314686

MAHAVIR SHAH

402-403 SHASHWAT

50795/57

BHOB, Ahmedabad

6/27/2003

11/15/2005

194.

12314694

MAMTA SHAH

402-403 SHASHWAT

50795/58

BHOB, Ahmedabad

6/27/2003

11/15/2005

195.

12314709

AMBICA SHAH

402-403 SHASHWAT

50795/58

BHOB, Ahmedabad

6/27/2003

11/15/2005

196.

12314717

PAWAN SHAH

402-403 SHASHWAT

50795/58

BHOB, Ahmedabad

6/27/2003

11/15/2005

197.

12314725

NIKITA SHAH

402-403 SHASHWAT

50795/59

BHOB, Ahmedabad

6/27/2003

11/15/2005

198.

12314733

DIPAK JASHVANTLAL

402-403 SHASHWAT

50795/94

BHOB, Ahmedabad

6/30/2003

11/15/2005

199.

12314740

DINESH JASHVANTLAL

402-403 SHASHWAT

50795/94

BHOB, Ahmedabad

6/30/2003

11/15/2005

200.

12314759

DILIP JASHVANTLAL

402-403 SHASHWAT

50795/94

BHOB, Ahmedabad

6/30/2003

11/15/2005

201.

12314768

DEVANGI DIPAKBHAI

402-403 SHASHWAT

50795/111

BHOB, Ahmedabad

6/30/2003

11/15/2005

202.

12314776

ROOPA DIPAK

402-403 SHASHWAT

50795/94

BHOB, Ahmedabad

6/30/2003

11/15/2005

203.

12314784

DHRUV DIPAKBHAI

402-403 SHASHWAT

50795/95

BHOB, Ahmedabad

6/30/2003

11/15/2005

204.

12314792

DEVAL DIPAKBHAI

402-403 SHASHWAT

50795/95

BHOB, Ahmedabad

6/30/2003

11/15/2005

205.

12314805

DEVESH DIPAKBHAI

402-403 SHASHWAT

50795/95

BHOB, Ahmedabad

6/30/2003

11/15/2005

206.

12314813

DIPAKBHAI

402-403 SHASHWAT

50795/96

BHOB, Ahmedabad

6/30/2003

11/15/2005

207.

12314820

MOXI DIPAKBHAI

402-403 SHASHWAT

50795/96

BHOB, Ahmedabad

6/30/2003

11/15/2005

208.

12314839

RANCHHODLAL NANALAL 402-403 SHASHWAT

50795/96

BHOB, Ahmedabad

6/30/2003

11/15/2005

209.

12314848

PRAMILABEN RANCHHODLAL 402-403 SHASHWAT

50795/95

BHOB, Ahmedabad

6/30/2003

11/15/2005

210.

12314856

NARMADABEN MANEKLAL 402-403 SHASHWAT

50795/97

BHOB, Ahmedabad

6/30/2003

11/15/2005

211.

12314864

BHARGAV RANCHHODLAL 402-403 SHASHWAT

50795/97

BHOB, Ahmedabad

6/30/2003

11/15/2005

212.

12314872

HINA BHARGAVBHAI

402-403 SHASHWAT

50795/98

BHOB, Ahmedabad

6/30/2003

11/15/2005

213.

12314889

MALAV BHARGAVBHAI

402-403 SHASHWAT

50795/98

BHOB, Ahmedabad

6/30/2003

11/15/2005

214.

12314897

SRIMAND BHARGAVBHAI 402-403 SHASHWAT

50795/98

BHOB, Ahmedabad

6/30/2003

11/15/2005

215.

12314900

HETA UTTAMKUMAR

402-403 SHASHWAT

50795/99

BHOB, Ahmedabad

6/30/2003

11/15/2005

216.

12314919

KIRITBHAI RASIKLAL

402-403 SHASHWAT

50795/99

BHOB, Ahmedabad

6/30/2003

11/15/2005

217.

12314928

CHHAYABEN KIRITBHAI 402-403 SHASHWAT

50795/99

BHOB, Ahmedabad

6/30/2003

11/15/2005

218.

12314936

NARESH NATVARLAL

402-403 SHASHWAT

50795/100

BHOB, Ahmedabad

6/30/2003

11/15/2005

219.

12314944

ROOPAL NARESHBHAI

402-403 SHASHWAT

50795/100

BHOB, Ahmedabad

6/30/2003

11/15/2005

220.

12314952

ARJAV NARESHBHAI

402-403 SHASHWAT

50795/100

BHOB, Ahmedabad

6/30/2003

11/15/2005

221.

12314969

AYUSHI NARESHBHAI

402-403 SHASHWAT

50795/101

BHOB, Ahmedabad

6/30/2003

11/15/2005

222.

12314977

NATVARLAL BHALCHAND 402-403 SHASHWAT

50795/101

BHOB, Ahmedabad

6/30/2003

11/15/2005

223.

12314985

RAMABEN NATVARLAL

402-403 SHASHWAT

50795/101

BHOB, Ahmedabad

6/30/2003

11/15/2005

224.

12314993

VIJAY GOVINDBHAI

402-403 SHASHWAT

50795/102

BHOB, Ahmedabad

6/30/2003

11/15/2005

225.

12315003

SANJAY GOVINDBHAI

402-403 SHASHWAT

50795/102

BHOB, Ahmedabad

6/30/2003

11/15/2005

226.

12315010

SANDIP GOVINDBHAI

402-403 SHASHWAT

50795/102

BHOB, Ahmedabad

6/30/2003

11/15/2005

227.

12315029

RAMILABEN GOVINDBHAI 402-403 SHASHWAT

50795/103

BHOB, Ahmedabad

6/30/2003

11/15/2005

228.

12315038

GOVINDBHAI NARANDAS 402-403 SHASHWAT

50795/103

BHOB, Ahmedabad

6/30/2003

11/15/2005

229.

12315046

NIKUNJ BABULAL

402-403 SHASHWAT

50795\103

BHOB, Ahmedabad

6/30/2003

11/15/2005

230.

12315054

HETAL NIKUNJBHAI

402-403 SHASHWAT

50795\104

BHOB, Ahmedabad

6/30/2003

11/15/2005

231.

12315062

MADHUBALA BABULAL

402-403 SHASHWAT

50795/104

BHOB, Ahmedabad

6/30/2003

11/15/2005

232.

12315079

BABULAL SHANTILAL

402-403 SHASHWAT

50795\104

BHOB, Ahmedabad

6/30/2003

11/15/2005

233.

12315087

NATVARLAL NARSINHBHAI 402-403 SHASHWAT

50795\105

BHOB, Ahmedabad

6/30/2003

11/15/2005

234.

12315095

USHABEN NATVARLAL

402-403 SHASHWAT

50795\105

BHOB, Ahmedabad

6/30/2003

11/15/2005

235.

12315109

KIRITBHAI NATVARLAL 402-403 SHASHWAT

50795\105

BHOB, Ahmedabad

6/30/2003

11/15/2005

236.

12315118

RAMILABEN KIRITBHAI 402-403 SHASHWAT

50795\106

BHOB, Ahmedabad

6/30/2003

11/15/2005

237.

12315126

AMIT KIRITBHAI

402-403 SHASHWAT

50795\106

BHOB, Ahmedabad

6/30/2003

11/15/2005

238.

12315134

MONIKA KIRITBHAI

402-403 SHASHWAT

50795\106

BHOB, Ahmedabad

6/30/2003

11/15/2005

239.

12315142

SONIKA KIRITBHAI

402-403 SHASHWAT

50795\107

BHOB, Ahmedabad

6/30/2003

11/15/2005

240.

12315159

YUVRAJ KIRITBHAI

402-403 SHASHWAT

50795\107

BHOB, Ahmedabad

6/30/2003

11/15/2005

241.

12315167

ASHVINKUMAR NATVARLAL 402-403 SHASHWAT

50795\107

BHOB, Ahmedabad

6/30/2003

11/15/2005

242.

12315175

BHANUBEN ASHVINKUMAR 402-403 SHASHWAT

50795\108

BHOB, Ahmedabad

6/30/2003

11/15/2005

243.

12315183

PRIYANSHU ASHVINKUMAR 402-403 SHASHWAT

50795\108

BHOB, Ahmedabad

6/30/2003

11/15/2005

244.

12315190

MADHUSUDAN NATVARLAL 402-403 SHASHWAT

50795\108

BHOB, Ahmedabad

6/30/2003

11/15/2005

245.

12315206

KARTIK NATVARLAL

402-403 SHASHWAT

50795\109

BHOB, Ahmedabad

6/30/2003

11/15/2005

246.

12315214

DONIKA NATVARLAL

402-403 SHASHWAT

50795\109

BHOB, Ahmedabad

6/30/2003

11/15/2005

247.

12315222

DEVENBHAI KANAIYALAL 402-403 SHASHWAT

50795\109

BHOB, Ahmedabad

6/30/2003

11/15/2005

248.

12315239

KRISHNABEN DEVENBHAI 402-403 SHASHWAT

50795/110

BHOB, Ahmedabad

6/27/2003

11/15/2005

249.

12315247

VISHAKHA DEVENBHAI

402-403 SHASHWAT

50795/111

BHOB, Ahmedabad

6/27/2003

11/15/2005

250.

12315255

KOMAL DEVENBHAI

402-403 SHASHWAT

50795/111

BHOB, Ahmedabad

6/27/2003

11/15/2005

251.

12315263

DIPAK NANCHAND

402-403 SHASHWAT

50795/111

BHOB, Ahmedabad

6/27/2003

11/15/2005

252.

12315270

LATA DIPAK

402-403 SHASHWAT

50795/112

BHOB, Ahmedabad

6/27/2003

11/15/2005

253.

12315289

NEELAM DIPAK

402-403 SHASHWAT

50795/112

BHOB, Ahmedabad

6/27/2003

11/15/2005

254.

12315298

SONAM DIPAK

402-403 SHASHWAT

50795/112

BHOB, Ahmedabad

6/27/2003

11/15/2005

255.

12315302

ZEEL DIPAK

402-403 SHASHWAT

50795/113

BHOB, Ahmedabad

6/27/2003

11/15/2005

256.

12315319

BHARAT KESHRIMAL

402-403 SHASHWAT

50795/113

BHOB, Ahmedabad

6/27/2003

11/15/2005

257.

12315327

BHAGWANTI BHARAT

402-403 SHASHWAT

50795/113

BHOB, Ahmedabad

6/27/2003

11/15/2005

258.

12315335

NIPA BHARAT

402-403 SHASHWAT

50795/114

BHOB, Ahmedabad

6/27/2003

11/15/2005

259.

12315343

NIHIR BHARAT

402-403 SHASHWAT

50795/114

BHOB, Ahmedabad

6/27/2003

11/15/2005

260.

12315350

MUNJAL BHARAT

402-403 SHASHWAT

50795/114

BHOB, Ahmedabad

6/27/2003

11/15/2005

261.

12315369

KANTILAL KESHRIMAL

402-403 SHASHWAT

50795/115

BHOB, Ahmedabad

6/27/2003

11/15/2005

262.

12315378

MANJULA KANTILAL

402-403 SHASHWAT

50795/115

BHOB, Ahmedabad

6/27/2003

11/15/2005

263.

12315386

PRITESH KANTILAL

402-403 SHASHWAT

50795/115

BHOB, Ahmedabad

6/27/2003

11/15/2005

264.

12315394

VISHAL KANTILAL

402-403 SHASHWAT

50795/116

BHOB, Ahmedabad

6/27/2003

11/15/2005

265.

12315409

PRAVIN KANTILAL

402-403 SHASHWAT

50795/116

BHOB, Ahmedabad

6/27/2003

11/15/2005

266.

12315417

BHAGWANTI PRAVIN

402-403 SHASHWAT

50795/116

BHOB, Ahmedabad

6/27/2003

11/15/2005

267.

12315425

SURBHI PRAVIN

402-403 SHASHWAT

50795/117

BHOB, Ahmedabad

6/27/2003

11/15/2005

268.

12315433

LALU PRAVIN

402-403 SHASHWAT

50795/117

BHOB, Ahmedabad

6/27/2003

12/30/2005

269.

12315440

SHAILESH NANCHAND

402-403 SHASHWAT

50795/117

BHOB, Ahmedabad

6/27/2003

11/15/2005

270.

12315459

JAGRUTI SHAILESH

402-403 SHASHWAT

50795/118

BHOB, Ahmedabad

6/27/2003

11/15/2005

271.

12315468

ANERI SHAILESH

402-403 SHASHWAT

50795/118

BHOB, Ahmedabad

6/27/2003

11/15/2005

272.

12315476

AYUSHI SHAILESH

402-403 SHASHWAT

50795/118

BHOB, Ahmedabad

6/27/2003

11/15/2005

273.

12315484

ROHIT NANCHAND

402-403 SHASHWAT

50795/119

BHOB, Ahmedabad

6/27/2003

11/15/2005

274.

12315492

ANJU ROHIT

402-403 SHASHWAT

50795/119

BHOB, Ahmedabad

6/27/2003

11/15/2005

275.

12315505

ROOPA ROHIT

402-403 SHASHWAT

50795/119

BHOB, Ahmedabad

6/27/2003

11/15/2005

276.

12315513

POOJA ROHIT

402-403 SHASHWAT

50795/120

BHOB, Ahmedabad

6/27/2003

11/15/2005

277.

12315520

NANCHAND KALUJI

402-403 SHASHWAT

50795/120

BHOB, Ahmedabad

6/27/2003

11/15/2005

278.

12315539

KUSUM NANCHAND

402-403 SHASHWAT

50795/120

BHOB, Ahmedabad

6/27/2003

11/15/2005

279.

12315548

BHARTI VINOD

402-403 SHASHWAT

50795/121

BHOB, Ahmedabad

6/27/2003

11/15/2005

280.

12315556

VINOD TILAKCHAND

402-403 SHASHWAT

50795/121

BHOB, Ahmedabad

6/27/2003

11/15/2005

281.

12315564

SANDIP VINOD

402-403 SHASHWAT

50795/121

BHOB, Ahmedabad

6/27/2003

11/15/2005

282.

12315572

JITENDRA PUKHRAJ

402-403 SHASHWAT

50795/122

BHOB, Ahmedabad

6/27/2003

11/15/2005

283.

12315589

SANGEETA JITENDRA

402-403 SHASHWAT

50795/122

BHOB, Ahmedabad

6/27/2003

11/15/2005

284.

12315597

DHIREN JITENDRA

402-403 SHASHWAT

50795/122

BHOB, Ahmedabad

6/27/2003

11/15/2005

285.

12315600

MANEK JITENDRA

402-403 SHASHWAT

50795/123

BHOB, Ahmedabad

6/27/2003

11/15/2005

286.

12315619

MOHAN MANGILAL

402-403 SHASHWAT

50795/123

BHOB, Ahmedabad

6/27/2003

11/15/2005

287.

12315628

SOBHNA MOHAN

402-403 SHASHWAT

50795/123

BHOB, Ahmedabad

6/27/2003

11/15/2005

288.

12315636

SUNITA MOHAN

402-403 SHASHWAT

50795/124

BHOB, Ahmedabad

6/27/2003

11/15/2005

289.

12315644

SURBHI MOHAN

402-403 SHASHWAT

50795/124

BHOB, Ahmedabad

6/27/2003

11/15/2005

290.

12315652

NIMISH MOHAN

402-403 SHASHWAT

50795/124

BHOB, Ahmedabad

6/27/2003

11/15/2005

291.

12315669

DEVICHAND MOHAN

402-403 SHASHWAT

50795/125

BHOB, Ahmedabad

6/27/2003

11/15/2005

292.

12315677

LEELA DEVICHAND

402-403 SHASHWAT

50795/125

BHOB, Ahmedabad

6/27/2003

11/15/2005

293.

12315685

MAHAVIR DEVICHAND

402-403 SHASHWAT

50795/125

BHOB, Ahmedabad

6/27/2003

11/15/2005

294.

12315693

MAMTA DEVICHAND

402-403 SHASHWAT

50795/126

BHOB, Ahmedabad

6/27/2003

11/15/2005

295.

12315708

AMBICA DEVICHAND

402-403 SHASHWAT

50795/126

BHOB, Ahmedabad

6/27/2003

11/15/2005

296.

12315716

PAWAN DEVICHAND

402-403 SHASHWAT

50795/126

BHOB, Ahmedabad

6/27/2003

11/15/2005

297.

12315724

NIKITA DEVICHAND

402-403 SHASHWAT

50795/127

BHOB, Ahmedabad

6/27/2003

11/15/2005

9.10. The 297 demat accounts indicated in the table above were opened by Karvy DP on June 27 / 30, 2003. The bank account no. 50795 that was indicated as the bank account of the dematerialized account-holders was closed on October 27, 2003. However, these demat accounts continued to be operative till November 15, 2005 (when these were closed pursuant to verification by Karvy DP in the wake of SEBI examination of the matter of IPO irregularities). These 297 demat accounts were part of the 37,240 afferent accounts in NSDL identified by SEBI. 9.11. Thus, it may be seen that Karvy had introduced the bank account no.50795 of the key operator to BhOB, Ahmedabad. Thereafter, Karvy had introduced two additional names to the bank account. Then, Karvy DP had opened afferent dematerialized accounts indicating the bank account no.50795 and the dematerialized accounts continued to be held with Karvy DP after the closure of the bank accounts. 9.12. It appears that Karvy had introduced various such bank accounts to BhOB, Ahmedabad branch. The observations emerging from an examination of one such account no.54119 is narrated below: 9.13. Introduction of Bank account no.54119 with BhOB, Ahmedabad by Karvy It was observed that savings bank account no 54119 in the name and style of "Devangi Dipakbhai Panchal - GROUP ACCOUNT" was introduced by Karvy Securities Ltd. on December 4, 2003. From the bank account opening form, this is seen to be a GROUP ACCOUNT of Devangi Panchal. There were no specific names indicated as joint account holders. Further, this bank account was closed on April 24, 2004. 9.14. In this context it may be mentioned that Karvy DP in its reply dated May 19, 2007 to the post-enquiry show-cause notice dated May 4, 2007, had stated that "The Idea Paper and process flow submitted to BhOB clearly mentions that the proposal is for financing investors who wish to subscribing book building issue of Maruti IPO only." It may be noted the Public Issue of Maruti closed in June 2003 whereas the subject bank account number 54119 was introduced by Karvy to BhOB Ahmedabad on December 04,2003. Therefore, it is clear that the arrangement between Karvy and BhOB continued even after the Maruti IPO. 9.15. Based on examination of the details of afferent dematerialized accounts held with Karvy DP, it is observed that 3450 afferent demat accounts pertaining to the key operator, Roopal Panchal had indicated their bank account as BHOB bank account no. 54119. These demat accounts were part of the 29,309 afferent accounts held with Karvy DP on NSDL. It is seen that these dematerialized accounts had been opened on various dates during December, 2003 / January, 2004. 9.16. Though the bank account no.54119 was closed on April 24, 2004, the corresponding 3450 afferent demat accounts continued to be operative till November 15, 2005. On November 15, 2005, Karvy DP closed these dematerialized accounts pursuant to verification conducted in the wake of SEBI preliminary enquiry into the IPO irregularities. The details of 3450 afferent demat accounts held with Karvy DP with bank account no 54119 are given below: Starting Name

Last Name

No. Of Demat Accts. Date Of Opening

Bank Account

No.

Daksha Luhar

Induben Luhar

600

December 17, 2003

54119/1 to 54119/600 Daksha Pari

Induben Pari

600

December 17, 2003

54119/451 to 54119/950 Daksha Mistri

Induben Mistri

600

January 5/6, 2004

54119/1 to 54119/600 Daksha Shroff

Induben Shroff

600

January 5/6, 2004

54119/601 to 54119/1200 Dasharath Seth

Badri Seth

50

February 18, 2004

54119/2201 to 54119/2250 Kunal Seth**

Babitha Seth

1000

January 5 /6, 2004

54119/1201 to 54119/2200 Total

3450

** - includes the series of names from SURESH SETH to ADITI SETH which would be discussed in detaillater for the successive repeat appearances in various morphed forms. 9.17. Thus, the bank account number 54119 held with BhOB, Ahmedabad had resulted in 3450 dematerialized accounts with Karvy DP. It may be seen that the dematerialized account-holders were having the same surnames. A sample of 100 such dematerialized account-holders sharing the surname of 'Luhar' is given below: Sr. No.

CLIENT ID

DP NAME

NAME OF SOURCE CLIENT ADDRESS OF SOURCE CLIENT DATE OF OPENING OF DEMAT ACCOUNT DATE OF CLOSURE OF DEMAT (IF APPLICABLE) ACCOUNT STATUS

9.18. From the above discussions, it may be noted that Karvy had introduced a bank account to BhOB, Ahmedabad during June 2003 and thereafter introduced another bank account to BhOB, Ahmedabad during December 2003. Additional names were added to each of these bank accounts and in certain instances, the addition of the names was certified by Karvy. Using these bank accounts and the names added thereto, thousands of dematerialized accounts were opened with Karvy DP. These dematerialized accounts were fake accounts pertaining to the key operators. While the bank accounts were closed during the year 2004, the dematerialized accounts continued to exist till November - December 2005, when they were closed pursuant to verification of genuineness by Karvy DP in the wake SEBI preliminary enquiry into the IPO irregularities. 9.19. Bank Accounts introduced by Karvy to IOB Subsequent to entering into an arrangement with BhOB and introducing the bank accounts of key operators and afferent entities for availing IPO finance, it was found that Karvy had entered into an arrangement with IOB for the same purpose. As per the arrangement of Karvy DP with IOB, IOB provided IPO finance to the persons who had their dematerialized accounts either with the DP IOB or with Karvy DP. Pursuant the arrangement with IOB, it was found that Karvy DP had introduced 40 bank accounts of the key operators Roopal Panchal and Kelan Atul Doshi. The details are narrated below:

9.20. During the verifications conducted by SEBI at the Indian Overseas Bank, Thaltej branch, vide letter dated March 4, 2006, at para 4, IOB submitted a list of 37 saving account numbers (which includes the account no 12140 taken for detailed discussions later) and names of saving account holders belonging to Roopal Panchal group. Thereafter, IOB vide letter dated October 13, 2006 submitted copies of 39 account opening forms containing list of 50 names attached with the account opening forms. Based on the details above, the tally of 40 accounts with list of 50 names added is set out in the table hereinunder. 9.21. A perusal of the 40 IOB bank account opening forms shows that 19 savings bank accounts, pertaining to the key operators Roopal Panchal and Kelan Atul Doshi, were introduced by Karvy Stock Broking Ltd and a list of 50 names attached with these forms were also certified by Karvy stock Broking Ltd. The remaining 21 saving bank accounts (40 nos. - 19 nos.) pertaining to Roopal Panchal were not introduced by Karvy stock broking Ltd. In respect of these 21 savings bank accounts it was observed that a list of 50 names were attached to each account and the list attached to as many as 19 savings bank accounts were certified by Karvy Consultants Ltd. (except in 2 cases) with the rubber stamp of Karvy Consultants and signature of Karvy's official affixed on the list of 50 names. The list of 40 bank accounts held with IOB Thaltej Branch is given below.

KSBL had identified the list of name by affixing a signature and rubber stamp

9.22. When KSBL introduced the said accounts in March 2005, it was not a DP.

9.23. From the above table, it may be seen that in most of the instances, the 50 account- holders added to each bank account number were sharing the same surnames. The names added to the bank accounts were in the same order as that in which the dematerialized accounts were held with Karvy DP. For instance, the list of 50 names added to the bank account no. 11954, began with Daksha Panchal and ended with Drumil Panchal. It may be recalled that, as narrated in an earlier part of this order, in the set of 100 dematerialized account-holders of Karvy DP having the surname of 'Luhar', the names of 'Daksha' to 'Drumil' appeared as the first 50 names. Further, in many instances, the bank accounts to which the 50 names were added were bearing continuous numbers. It is observed that such an arrangement was made for availing IPO finance from IOB. 9.24. On perusal of the documents pertaining to the bank accounts, it is seen that all the signatures have been made with the same pen and by the same person in one go. It may be noted that all the names contained in the list attached to the application forms had dematerialized accounts with Karvy DP and had been identified as afferent accounts. 9.25. In this regard, I note that at para 14.10 of its reply dated May 19, 2007, Karvy DP stated "It is not understood as to on what basis it has been held that KCL had certified that all the respective applicants are maintaining their demat accounts with them and that KCL had also certified their signatures. For any such certification, any person of normal intelligence would have sought the demat account number along with the name and signature, which is not the case in the list that has been brought out."

9.26. In this context, I note that the DP in its appeal memorandum (Appeal NO. 92 of 2006) inter alia stated that "... the Appellant had not introduced the said 50 clients to IOB Thaltej. The appellant has only certified pursuant to IPO sub- broker, that the said 50 demat accounts with the Appellant. It is submitted that all the said 50 clients had, as per appellant's record, bank accounts with BHOB. Therefore, the certification given by the Appellant was for existence of demat account as sought to be suggested". 9.27. The submissions of Karvy DP in its reply dated May 19, 2007 contradicts the earlier submissions made by it before the Hon'ble SAT. In any case, I note that the bank account opening forms did contain enclosures listing out the dematerialized account particulars of the 50 names added to the IOB bank account.Also, the names added to the bank accounts were in the same order as that in which the dematerialized accounts were held with Karvy DP. Therefore, the denial of Karvy that it did not certify to IOB that the 50 names added to the bank accounts had dematerialized accounts with Kavy DP is merely a denial of convenience.

9.28. Observations on Savings Bank Account No. 12140 with IOB, Ahmedabad Introduced By Karvy Out of the 19 bank accounts of Roopal Panchal group that were introduced by KSBL and where there were additions of 50 names certified by KSBL, one bank account having no.12140 was randomly selected for examination. The observations emerging from the same is narrated below: 9.29. A perusal of account opening form of savings bank account number 12140 with IOB, Thaltej Branch, Ahmedabad in the name of Roopal Nareshbhai Panchal and Devangi Dipakbhai Panchal bearing the address 402, Shashwat Opp Gujarat College, Ellisbrdige, Ahmedabad 3800006 reveals as under:

? The said account (opened on March 9, 2005) was introduced by M/s. Karvy Stock Broking Ltd. ? A list of 50 names and specimen signatures is attached to the account opening form and the list is certified by Karvy Stock Broking Ltd. with their rubber stamp affixed. ? The rubber stamp of Karvy on the main bank account introduction column and that in the attached list is similar. ? The signature of the representative of Karvy as appearing on the main bank account introduction column and that in the attached list appears to have been made with the same pen. ? The list of 50 names and signatures bears the account number 12140 on the top right hand side of the list. ? The 50 applicants bear common surname "SETH" starting from SURESH SETH and ending with ADITI SETH. ? The signatures of the 50 applicants are in English, Hindi and Gujarathi and appear to have been made by the same person. 9.30. Further, it is seen that Karvy DP held the dematerialized accounts of the 50 names that were added to the bank account no.12140 and the dematerialized accounts had been opened prior to the opening of the bank account. The details are as below: Sr. No.

9.31. A cursory look at the names appearing in the list suggests that they could be names of fictitious persons in view of the pattern of the names mentioned in the list i.e. 50 different names with same surname of SETH. The signatures of the 50 persons also appear similar and appear to have been made by one person only. Anyway all afferent accounts have been found to be fictitious. Accordingly it would follow that only one central / control person could have signed. Therefore, from the above observations on the bank account opening form (account no. 12140) wherein Karvy Stock Broking Ltd had certified the account holders, it stands to reason that Karvy were aware that the names and signatures are of fictitious persons. 9.32. In this regard, KSBL in its reply dated May 19, 2007 has contended that the list of 50 names is a separate document and is not connected to the savings connected. I do not find merit in the argument of Karvy since the relevant documents were submitted by the concerned bank i.e. IOB. If the documents were not relating to savings account, the bank would not have come to possess the document. 9.33. Karvy had further contended that the documents attached to the bank account no. 12140 pertain to another bank account bearing no.11983. In this regard I note that the documents are in one set kept together with the savings account opening form of account no.12140. Also the list of 50 names attached to the account no. 12140 mentions in the account no.12140 in the top right hand corner. In any case, I note that the savings account 11983 also had a list of 50 names added and the name addition in that case was certified by KCL. Therefore, I do not find merit in this argument of Karvy. 9.34. Further Karvy had contended that "it can't be held that the employee of the company had introduced 50 additional names." In this context it is relevant to note that Karvy DP in its appeal memorandum (Appeal NO. 92 of 2006) inter alia stated that "... the Appellant had not introduced the said 50 clients to IOB Thaltej. The appellant has only certified pursuant to IOB sub- broker, that the said 50 demat accounts with the Appellant. It is submitted that all the said 50 clients had, as per appellant's record, bank accounts with BHOB. Therefore, the certification given by the Appellant was for existence of demat account as sought to be suggested". 9.35. Therefore, I find that indeed 50 names were added to the SB account no.12140 of Roopal Panchal group held with IOB, Thaltej branch and Karvy had indeed introduced the bank account and certified the names added to the bank account. In this regard, I note that Karvy DP had an arrangement with IOB along the same lines as that with BhOB, whereby, IOB provided IPO finance to the dematerialized account-holders of Karvy DP.

9.36. In the demat system, the bank accounts of all the above afferent dematerialized account-holders have indicated as being held with BhOB and the account number indicated is 54119. It may be recalled that the BhOB account no.54119 is Devangi Dipakbhai Panchal group account that had been introduced by Karvy Securities Ltd. on December 4, 2003. Threfore, it follows that after the opening of bank group account of Devangi Dipakbhai Panchal on December 4, 2003, Karvy DP opened their dematerialized accounts on January 5, 2004 and thereafter, the DP introduced these names to IOB Thaltej during March 2005 for the purpose of opening bank accounts and availing IPO finance. In this context, it may recalled that Karvy DP had an arrangement with IOB also on the same lines as with BhOB. 9.37. The various unique characteristics relating to the add-on list of the IOB bank account demonstrates a common modus operandi with a common control. All the above 50 are existing dematerialized account holders with Karvy and their demat accounts were opened in January 2004 on the basis of single BHOB account with sub-numbers opened in December 2003 with the introduction of Karvy Securities Ltd. Thus there is a clear nexus between the genesis of these accounts and their subsequent reappearance with IOB in March 2005 for availing IPO finance. These are all incontrovertible factual data. 9.38. Further, there is a continuity in the said pattern from December 2003 to March 2005 and thereafter as well which can hardly escape anybody's attention. Also the key operators account had been introduced by KSBL, while the add-on list had been certified by KSBL by affixing rubber stamp and signature as admitted in the grounds of appeal before SAT. KSBL has taken the stand in its reply dated May 19, 2007 in the present proceedings that "simply because employees of Karvy had introduced the accounts and perhaps put the address or stamp of the company on the forms it cannot be concluded that the company was aware of the activities of the employees." Such a shifting stance hardly canvasses any strength for Karvy's defence. 9.39. Further as per the arrangement with IOB, IOB was to provide IPO finance only to those borrowers having demat accounts with Karvy DP or IOB DP. Therefore Karvy cannot distance itself from the arrangement by putting the blame on employees. In any event Karvy is responsible. 9.40. In such a context, Karvy was not only aware of fictitious accounts but also was actively involved in scouting financial package for such non-existing persons, on the basis of fictitious demat accounts (afferent accounts). It is a matter of record that Karvy was only dealing with the key operators and as such was a privy to the arrangement Karvy had with the key operators in opening bank accounts and afferent demat accounts and arranging IPO finance. 9.41. Combinations of 50 Names with different surnames in Karvy DP on CDSL

Sr. No.

Surname

No. of CDSL Demat Accounts

1.

Zala

50

2.

Rathod

50

3.

Vania

50

4.

Patil

50

5.

Ranka

50

6.

Pandya

50

7.

Desai

50

8.

Rathi

50

9.

Verma

50

10.

Trivedi

50

11.

Gandhi

50

12.

Barot

50

13.

Vala

50

14.

Pathak

50

15.

Bhatt

50

Sr. No.

Surname

No. of CDSL Demat Accounts Total

750

9.42. The details of dematerialized accounts in respect of two such surnames viz. Zala and Pandya are as below: BOID

Acc Op Date

BOName

BOAdd

BOCity

Bank Acc No

BenBank Name

1301440000056768

15072005

SURESH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10048

BHOB

1301440000056772

15072005

ABHAY ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10049

BHOB

1301440000056787

15072005

DEVANSHI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10050

BHOB

1301440000056791

15072005

GULJAR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10051

BHOB

1301440000056808

15072005

JENNY ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10052

BHOB

1301440000056812

15072005

LABDHA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10053

BHOB

1301440000056827

15072005

YASHI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10054

BHOB

1301440000056831

15072005

NIRU ZALA

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10055

BHOB

1301440000056846

15072005

NITA ZALA

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10056

BHOB

1301440000056850

15072005

UTPALL ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10057

BHOB

1301440000056865

15072005

ABHIGNA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10058

BHOB

1301440000056871

15072005

BALWANT ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10059

BHOB

1301440000056884

15072005

DEVARSHI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10060

BHOB

1301440000056899

15072005

GUMAN ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10061

BHOB

1301440000056905

15072005

JHANKI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10062

BHOB

1301440000056911

15072005

LAGNI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10063

BHOB

1301440000056924

15072005

YASHU ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10064

BHOB

1301440000056939

15072005

NIRUPAMA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10065

BHOB

1301440000056943

15072005

NITANSH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10066

BHOB

1301440000056958

15072005

SWATI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10067

BHOB

1301440000056962

15072005

ABHILASH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10068

BHOB

1301440000056977

15072005

BALWIR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10069

BHOB

1301440000056981

15072005

DEVASYA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10070

BHOB

1301440000056996

15072005

GUNISH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10071

BHOB

1301440000057003

15072005

JIGAR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10072

BHOB

1301440000057018

15072005

LAHAR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10073

BHOB

1301440000057022

15072005

YATNA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10074

BHOB

1301440000057037

15072005

NIRVI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10075

BHOB

1301440000057041

15072005

NITIN ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10076

BHOB

1301440000057056

15072005

TRUSHIT ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10077

BHOB

1301440000057060

15072005

ABHISHEK ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10078

BHOB

1301440000057075

15072005

BANJUL .

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10079

BHOB

1301440000057081

15072005

DEVENDRA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10080

BHOB

1301440000057094

15072005

GUNJAK ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10081

BHOB

1301440000057100

15072005

JIGISH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10082

BHOB

1301440000057115

15072005

LAJJA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10083

BHOB

1301440000057121

15072005

YATRI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10084

BHOB

1301440000057134

15072005

NISAR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10085

BHOB

1301440000057149

15072005

DEPARV ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10086

BHOB

1301440000057153

15072005

TUKHAR ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10087

BHOB

1301440000057168

15072005

ADIP ZALA

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10088

BHOB

1301440000057172

15072005

BANKIM ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10089

BHOB

1301440000057187

15072005

DEVI ZALA

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10090

BHOB

1301440000057191

15072005

JIMISH ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10091

BHOB

1301440000057208

15072005

LAKENDRA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10092

BHOB

1301440000057212

15072005

YAVAN ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10093

BHOB

1301440000057227

15072005

MIYA ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10094

BHOB

1301440000057231

15072005

ROHINI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10095

BHOB

1301440000057246

15072005

TURANG ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10096

BHOB

1301440000057250

15072005

ADITI ZALA.

Office No.403, Shashwat Bldg. AHMEDABAD

9550-10097

BHOB

BOID

AccOp Date

BOName

BOAdd

BOCity

Ben Bank AccNo

Bank

Status

1301440000106761

16072005

SURESH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-48

BHOB

Closed

1301440000106774

16072005

ABHAY PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-49

BHOB

Closed

1301440000106789

16072005

DEVANSHI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-50

BHOB

Closed

1301440000106793

16072005

GULJAR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-51

BHOB

Closed

1301440000106801

16072005

JENNY PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-52

BHOB

Closed

1301440000106814

16072005

LABDHA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-53

BHOB

Closed

1301440000106829

16072005

YASHI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-54

BHOB

Closed

1301440000106833

16072005

NIRU PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-55

BHOB

Closed

1301440000106848

16072005

NITA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-56

BHOB

Closed

1301440000106852

16072005

UTPALL PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-57

BHOB

Closed

1301440000106867

16072005

ABHIGNA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-58

BHOB

Closed

1301440000106871

16072005

BALWANT PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-59

BHOB

Closed

1301440000106886

16072005

DEVARSHI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-60

BHOB

Closed

1301440000106890

16072005

GUMAN PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-61

BHOB

Closed

1301440000106907

16072005

JHANKI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-62

BHOB

Closed

1301440000106911

16072005

LAGNI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-63

BHOB

Closed

1301440000106926

16072005

YASHU PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-64

BHOB

Closed

1301440000106930

16072005

NIRUPAMA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMED AB AD

9550-65

BHOB

Closed

1301440000106945

16072005

NITANSH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-66

BHOB

Closed

1301440000106951

16072005

SWATI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-67

BHOB

Closed

1301440000106964

16072005

ABHILASH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-68

BHOB

Closed

1301440000106979

16072005

BALWIR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-69

BHOB

Closed

1301440000106983

16072005

DEVASYA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-70

BHOB

Closed

1301440000106998

16072005

GUNISH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-71

BHOB

Closed

1301440000107005

16072005

JIGAR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-72

BHOB

Closed

1301440000107011

16072005

LAHAR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-73

BHOB

Closed

1301440000107024

16072005

YATNA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-74

BHOB

Closed

1301440000107039

16072005

NIRVI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-75

BHOB

Closed

1301440000107043

16072005

NITIN PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-76

BHOB

Closed

1301440000107058

16072005

TRUSHIT PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-77

BHOB

Closed

1301440000107062

16072005

ABHISHEK PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-78

BHOB

Closed

1301440000107077

16072005

BANJUL PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-79

BHOB

Closed

1301440000107081

16072005

DEVENDRA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-80

BHOB

Closed

1301440000107096

16072005

GUNJAK PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-81

BHOB

Closed

1301440000107102

16072005

JIGISH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-82

BHOB

Closed

1301440000107117

16072005

LAJJA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-83

BHOB

Closed

1301440000107121

16072005

YATRI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-84

BHOB

Closed

1301440000107136

16072005

NISAR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-85

BHOB

Closed

1301440000107140

16072005

DEPARV PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-86

BHOB

Closed

1301440000107155

16072005

TUKHAR PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-87

BHOB

Closed

1301440000107161

16072005

ADIP PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-88

BHOB

Closed

1301440000107174

16072005

BANKIM PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-89

BHOB

Closed

1301440000107189

16072005

DEVI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-90

BHOB

Closed

1301440000107193

16072005

JIMISH PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-91

BHOB

Closed

1301440000107201

16072005

LAKENDRA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-92

BHOB

Closed

1301440000107214

16072005

YAVAN PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-93

BHOB

Closed

1301440000107229

16072005

MIYA PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-94

BHOB

Closed

1301440000107233

16072005

ROHINI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-95

BHOB

Closed

1301440000107248

16072005

TURANG PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-96

BHOB

Closed

1301440000107252

16072005

ADITI PANDYA.

406, SHASHWAT OPP. GUJARAT COLLEGE AHMEDABAD

9550-97

BHOB

Closed

Note: It may be seen from discussions in later paragraphs that KCL had provided IPO finance in respect of the above dematerialized account-holders i.e. SURESH PANDYA to ADITI PANDYA 9.43. The BHOB bank account number 9550 is indicated as the bank account of the above demat account holders. Upon perusal of the account opening form of the BHOB bank account number 9550 it is seen that the said account is held in the name of 'Arjav Naresh Panchal' and the account had been introduced by Devangi Dipak Panchal having the address 402-403, Shashwat, Opp Gujarat College, Ellisbridge, Ahmedabad 380 006. The account had been opened in December 2004. 9.44. It is observed that the 750 demat accounts were opened on CDSL during July 15 - 16, 2005 and were activated on July 15-16, 2005 i.e. during the period of IDFC IPO. Thereafter, during the course of verification of genuineness of demat clients in the wake of SEBI's preliminary enquiry in the matter of Yes Bank IPO, the dematerialized accounts were closed. These afferent accounts closely match the ones noticed in the context of IOB accounts opened earlier in March 2005. The CDSL demat accounts were opened for making applications in IDFC IPO and it is seen that KCL had provided IPO finance to the fictitious applicants having their demat accounts with CDSL. The details of the same have been discussed elsewhere in this order. 9.45. Karvy DP CDSL Accounts pending Activation with names of Suresh to Aditi

It was found that the same pattern of opening of demat accounts with the same 50 first names from 'SURESH' to 'ADITI' and various surnames had been adopted in respect of 500 dematerialized accounts opened with Karvy DP on September 22, 2005 that were pending for activation. The table below indicates the details of the demat accounts which are pending for activation: Sr. No.

Surname

No. of CDSL Demat Accounts Date of Opening demat accounts Remarks

1.

Kapur

50

September 22, 2005

Demat accounts opened and pending activation

2.

Tated

50

As above

As above

3.

Kela

50

As above

As above

4.

Sen

50

As above

As above

5.

Roy

50

As above

As above

6.

Irani

50

As above

As above

7.

Jha

50

As above

As above

8.

Mehta

50

As above

As above

9.

Das

50

As above

As above

10.

Prasad

50

As above

As above

Total

500

9.46. The details of the above 500 CDSL dematerialized accounts held with Karvy DP opened on September 22, 2005 and pending activation is given below:

BOID

AccOpDate

BOName

BO Address

BOCity

BenBankAccNo

BANK NAME

1301440000410188

22092005

SURESH TATED.

Office No.402, Shashwat Bldg. AHD

2611-16048

IOB

1301440000410192

22092005

ABHAY TATED.

Office No.402, Shashwat Bldg. AHD

2611-16049

IOB

1301440000410209

22092005

DEVANSHI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16050

IOB

1301440000410213

22092005

GULJAR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16051

IOB

1301440000410228

22092005

JENNY TATED.

Office No.402, Shashwat Bldg. AHD

2611-16052

IOB

1301440000410232

22092005

LABDHA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16053

IOB

1301440000410247

22092005

YASHI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16054

IOB

1301440000410251

22092005

NIRU TATED.

Office No.402, Shashwat Bldg. AHD

2611-16055

IOB

1301440000410266

22092005

NITA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16056

IOB

1301440000410270

22092005

UTPALL TATED.

Office No.402, Shashwat Bldg. AHD

2611-16057

IOB

1301440000410285

22092005

ABHIGNA TATED

Office No.402, Shashwat Bldg. AHD

2611-16058

IOB

1301440000410291

22092005

BALWANT TATED.

Office No.402, Shashwat Bldg. AHD

2611-16059

IOB

1301440000410306

22092005

DEVARSHI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16060

IOB

1301440000410310

22092005

GUMAN TATED.

Office No.402, Shashwat Bldg. AHD

2611-16061

IOB

1301440000410325

22092005

JHANKI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16062

IOB

1301440000410331

22092005

LAGNI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16063

IOB

1301440000410344

22092005

YASHU TATED.

Office No.402, Shashwat Bldg. AHD

2611-16064

IOB

1301440000410359

22092005

NIRUPAMA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16065

IOB

1301440000410363

22092005

NITANSH TATED

Office No.402, Shashwat Bldg. AHD

2611-16066

IOB

1301440000410378

22092005

SWATI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16067

IOB

1301440000410382

22092005

ABHILASH TATED.

Office No.402, Shashwat Bldg. AHD

2611-16068

IOB

1301440000410397

22092005

BALWIR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16069

IOB

1301440000410403

22092005

DEVASYA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16070

IOB

1301440000410418

22092005

GUNISH TATED.

Office No.402, Shashwat Bldg. AHD

2611-16071

IOB

1301440000410422

22092005

JIGAR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16072

IOB

1301440000410437

22092005

LAHAR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16073

IOB

1301440000410441

22092005

YATNA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16074

IOB

1301440000410456

22092005

NIRVI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16075

IOB

1301440000410460

22092005

NITIN TATED.

Office No.402, Shashwat Bldg. AHD

2611-16076

IOB

1301440000410475

22092005

TRUSHIT TATED.

Office No.402, Shashwat Bldg. AHD

2611-16077

IOB

1301440000410481

22092005

ABHISHEK TATED.

Office No.402, Shashwat Bldg. AHD

2611-16078

IOB

1301440000410494

22092005

BANJUL.

Office No.402, Shashwat Bldg. AHD

2611-16079

IOB

1301440000410500

22092005

DEVENDRA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16080

IOB

1301440000410515

22092005

GUNJAK TATED.

Office No.402, Shashwat Bldg. AHD

2611-16081

IOB

1301440000410521

22092005

JIGISH TATED.

Office No.402, Shashwat Bldg. AHD

2611-16082

IOB

1301440000410534

22092005

LAJJA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16083

IOB

1301440000410549

22092005

YATRI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16084

IOB

1301440000410553

22092005

NISAR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16085

IOB

1301440000410568

22092005

DEPARV TATED.

Office No.402, Shashwat Bldg. AHD

2611-16086

IOB

1301440000410572

22092005

TUKHAR TATED.

Office No.402, Shashwat Bldg. AHD

2611-16087

IOB

1301440000410587

22092005

ADIP TATED.

Office No.402, Shashwat Bldg. AHD

2611-16088

IOB

1301440000410591

22092005

BANKIM TATED.

Office No.402, Shashwat Bldg. AHD

2611-16089

IOB

1301440000410608

22092005

DEVI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16090

IOB

1301440000410612

22092005

JIMISH TATED.

Office No.402, Shashwat Bldg. AHD

2611-16091

IOB

1301440000410627

22092005

LAKENDRA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16092

IOB

1301440000410631

22092005

YAVAN TATED.

Office No.402, Shashwat Bldg. AHD

2611-16093

IOB

1301440000410646

22092005

MIYA TATED.

Office No.402, Shashwat Bldg. AHD

2611-16094

IOB

1301440000410650

22092005

ROHINI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16095

IOB

1301440000410665

22092005

TURANG TATED.

Office No.402, Shashwat Bldg. AHD

2611-16096

IOB

1301440000410671

22092005

ADITI TATED.

Office No.402, Shashwat Bldg. AHD

2611-16097

IOB

9.47. Examination Demat Account opening forms in respect of names added to IOB Thaltej branch Account 12140 During the course of the instant proceedings, as required by SEBI, Karvy had submitted a few NSDL demat account opening forms in respect of the demat accounts list of names attached to the IOB Thaltej branch account no. 12140. The observations on the documents submitted by Karvy DP are tabulated below: Demat Account No

Letter from BHOB (No photograph affixed) Bank account 54119 (group account) introduced by Karvy Securities 9.48. From the above table it may be seen that the IOB bank account holders introduced by Karvy to IOB Thaltej branch had indicated in the depository system, the BHOB bank account number 54119 as their bank account. It may be recalled that the said BHOB bank account number 54119 had been introduced by Karvy Securities Ltd. during December 2003.

It has been observed that out of the above set of demat accounts opened on CDSL on July 15-16, 2005 with various combination of names starting with SURESH TO ADITI, in respect of following set of names, KCL had also financed in the IPO of IDFC and KCPL had issued consolidated refund order no. 69001 in respect of these applicants. Further, it was also observed that Karvy DP had issued loose DIS slips bearing continuous serial numbers which were used for making off-market transfers from these dematerialized accounts to the dematerialized account of Roopalben Panchal. 9.50. In its reply dated May 19, 2007, Karvy DP had at para 15.2 (ii) stated "KCL had not extended finance to any of the applicants, for any of the IPOs, whose names are appearing in the sheet attached to the savings bank account opening application forms as contained in Annexure 1 to the Notice in any of the Issues. Admittedly, IOB Thaltej branch Ahmedabad, had provided IPO funding in respect of the said applicants in IDFC." The details as culled out from the allotment master and from the DIS data furnished by CDSL in respect of those dematerialized accounts / IPO applicants where KCL had provided finance in the IPO of IDFC shows that KCL had indeed provided IPO finance through various combinations of surnames of the fictitious / benami names that were added to the IOB bank account. In fact, the application money in respect of these applicants was directly remitted by KCL to the IDFC public issue escrow account through RTGS transfer and it never went through the bank accounts of the afferent entities. The details of the applications made, refund and allotment details are given below: Mode of Financing

Place of Bidding

Appl_No

Name of Applicant

Bid Amt (Rs.)

Amt of Refund (Rs.) Refund Order No.

No. of Shares Allotted DIS No

RTGS

HYDERABAD

32985831

SURESH PANDYA

47600

38556

690001

266

74919

RTGS

HYDERABAD

32985830

ABHAY PANDYA

47600

38556

690001

266

74920

RTGS

HYDERABAD

32985829

DEVANSHI PANDYA

47600

38556

690001

266

74921

RTGS

HYDERABAD

32985828

GULJAR PANDYA

47600

38556

690001

266

74922

RTGS

HYDERABAD

32985827

JENNY PANDYA

47600

38556

690001

266

74923

RTGS

HYDERABAD

32985826

LABOHA PANDYA

47600

38556

690001

266

74924

RTGS

HYDERABAD

32985825

YASHI PANDYA

47600

38556

690001

266

74925

RTGS

HYDERABAD

32985824

NIRU PANDYA

47600

38556

690001

266

74926

RTGS

HYDERABAD

32985823

NITA PANDYA

47600

38556

690001

266

74927

RTGS

HYDERABAD

32985822

UTAPLL PANDYA

47600

38556

690001

266

74928

RTGS

HYDERABAD

32985821

ABHIGNA PANDYA

47600

38556

690001

266

74929

RTGS

HYDERABAD

32985820

BALWANT PANDYA

47600

38556

690001

266

74930

RTGS

HYDERABAD

32985819

DEVARSHI PANDYA

47600

38556

690001

266

74931

RTGS

HYDERABAD

32985818

GUMAN PANDYA

47600

38556

690001

266

74932

RTGS

HYDERABAD

32985817

JHANKI PANDYA

47600

38556

690001

266

74933

RTGS

HYDERABAD

32985816

LAGNI PANDYA

47600

38556

690001

266

74934

RTGS

HYDERABAD

32985815

KASHU PANDYA

47600

38556

690001

266

74935

RTGS

HYDERABAD

32985554

NIRUPAMA PANDYA

47600

38556

690001

266

74936

RTGS

HYDERABAD

32985553

NITANSH PANDYA

47600

38556

690001

266

74937

RTGS

HYDERABAD

32985552

SWATI PANDYA

47600

38556

690001

266

74938

RTGS

HYDERABAD

32985776

ABHILASH PANDY

47600

38556

690001

266

74939

RTGS

HYDERABAD

32985771

BALWIR PANDYA

47600

38556

690001

266

74940

RTGS

HYDERABAD

32985770

DEVASPA PANDYA

47600

38556

690001

266

74941

RTGS

HYDERABAD

32985769

GUNISH PANDYA

47600

38556

690001

266

74942

RTGS

HYDERABAD

32985768

JIGAR PANDYA

47600

38556

690001

266

74943

RTGS

HYDERABAD

33016532

LAHAR PANDYA

47600

38556

690001

266

74944

RTGS

HYDERABAD

32985766

YATNA PANDYA

47600

38556

690001

266

74945

RTGS

HYDERABAD

32985765

NIRVI PANDYA

47600

38556

690001

266

74946

RTGS

HYDERABAD

32985764

NITIN PANDYA

47600

38556

690001

266

74947

RTGS

HYDERABAD

32985763

TRUSHIT PANDYA

47600

38556

690001

266

74948

RTGS

HYDERABAD

32985813

ABHISHEK PANDYA

47600

38556

690001

266

74949

RTGS

HYDERABAD

32985812

BANJUL PANDYA

47600

38556

690001

266

74950

RTGS

HYDERABAD

32985811

DEVENDRA PANDYA

47600

38556

690001

266

74951

RTGS

HYDERABAD

32985810

GUNJAK PANDYA

47600

38556

690001

266

74952

RTGS

HYDERABAD

32985809

JIGISH PANDYA

47600

38556

690001

266

74953

RTGS

HYDERABAD

32985808

LAJJA PANDYA

47600

38556

690001

266

74954

RTGS

HYDERABAD

32985789

YATRI PANDYA

47600

38556

690001

266

74955

RTGS

HYDERABAD

32985788

NISAR PANDYA

47600

38556

690001

266

74956

RTGS

HYDERABAD

32985787

DEPARV PANDYA

47600

38556

690001

266

74957

RTGS

HYDERABAD

32985807

TUKHAR PANDYA

47600

38556

690001

266

74958

RTGS

HYDERABAD

32985805

ADIP PANDYA

47600

38556

690001

266

74959

RTGS

HYDERABAD

32985804

BANKIM PANDYA

47600

38556

690001

266

74960

RTGS

HYDERABAD

32985803

DEVI PANDYA

47600

38556

690001

266

74961

RTGS

HYDERABAD

32985802

JIMISH PANDYA

47600

38556

690001

266

74962

RTGS

HYDERABAD

32985801

LAKENDRA PANDYA

47600

38556

690001

266

74963

RTGS

HYDERABAD

32985800

YAVAN PANDYA

47600

38556

690001

266

74964

RTGS

HYDERABAD

32985799

MIYA PANDYA

47600

38556

690001

266

74965

RTGS

HYDERABAD

32985798

ROHINI PANDYA

47600

38556

690001

266

74966

RTGS

HYDERABAD

32985797

TURANG PANDYA

47600

38556

690001

266

74967

RTGS

HYDERABAD

32985796

ADITI PANDYA

47600

38556

690001

266

74968

9.51. From the above table it may be seen that KCL had done RTGS transfer of application money to the IDFC escrow account. KSBL bid the applications without obtaining application money and KCPL (RTI) issued consolidated refund order no. 690001 in respect of these fictitious applicants. Thereafter, KSBL (DP) transferred the IPO shares from the demat accounts of the fictitious/benami entities to the demat accounts of the key operators using the DIS numbers indicated in the last column of the table. It is noted that the DIS pertaining to different applicants were in continous serial numbers indicating the control of one or few persons in the maintenance and operation of the numerous demat accounts held in fictitious/benami names. That Karvy DP accepted consolidated payments from the key operators towards maintenance of these demat accounts also supports this finding. 9.52. It is also observed that while the details pertaining to the series of applications from 'SURESH PANDYA' to 'ADITI PANDYA' has been indicated in the table, there were also other sets of applications wherein the same features were observed. While the first names in respect of these applications were in the same series beginning from 'SURESH' and ending with 'ADITI', the surnames that were used instead of 'Pandya' were Verma, Gandhi, Trivedi and Desai. 9.53. Issuance of Consolidated Refund by KCPL in respect of Names added to IOB Thaltej Bank account no. 12140 Based on the allotment master in the IPO of IDFC, as submitted by KCPL, it is seen that the list of names of the IPO applicants starting from SURESH SETH to ADITI SETH are in the same order as the list of names attached to the IOB Thaltej branch account no 12140. Further, it is also seen that KCPL (which is RTI in the IPO of IDFC) had issued a consolidated refund order no. 660004 in favour of IOB for Rs 61.24 crores in respect of 15,751 applications including those made by the set of 50 applicants starting from Suresh Seth to Aditi Seth. 9.54. Thus, from the above, it is clear that Karvy had initially introduced BhOB Ahmedabad bank account no. 54119 in the month of December 2003. Subsequently demat accounts were opened with Karvy DP on NSDL in the month of December 2003 / January 2004 indicating the bank details of BHOB. The said NSDL dematerialized accounts include the 50 names beginning from SURESH SETH to ADITI SETH. The said bank account no.54119 was thereafter closed on April 24, 2004. The dematerialized accounts continued to exist with Karvy DP even after the closure of the bank account.

9.55. Thereafter, in March 2005, Karvy introduced bank account of Devangi Dipakbhai Panchal (account no: 12140), a key operator belonging to the Panchal group, to IOB Thaltej Branch and also certified the list of names attached with the said bank account (SURESH SETH to ADITI SETH) for the purpose of arranging IPO finance. It is observed that in the IPO of IDFC (July 2005), IOB had financed 15,751 applications which include the 50 names beginning with SURESH SETH till ADITI SETH. Further, Karvy Computer share Pvt. Ltd, RTI in the IPO of IDFC had issued consolidated refund order no. 660004 to IOB. 9.56. Synchronised Off-market transfers from Afferent Accounts to Key Operators

After the allotment of shares on August 6, 2005 the shares were transferred through off-market transactions from the dematerialized accounts of the allottees (including SURESH SETH till ADITI SETH) to the demat account of Roopal Panchal (client ID: 11920868) on August 8, 2005. With regard to these off-market transfers, it was observed that Karvy DP had issued loose DIS slips which had continuous serial numbers. The details of the off market transfers in the IPO of IDFC in respect of these transactions are given in the table below: Sr. No.

CLIENT ID

NAME OF THE DEMAT ACCOUNT HOLDER TARGET CLIENT NAME

Date of execution

NO OF SHARES

SLIPNO

1.

13130266

SURESH SETH

Roopal Panchal

August 8, 2005

266

200167245

2.

13130274

ABHAY SETH

Roopal Panchal

August 8, 2005

266

200167246

3.

13130299

DEVANSHI SETH

Roopal Panchal

August 8, 2005

266

200167248

4.

13130329

LABDHA SETH

Roopal Panchal

August 8, 2005

266

200167249

5.

13130338

YASHI SETH

Roopal Panchal

August 8, 2005

266

200167250

6.

13130346

NIRU SETH

Roopal Panchal

August 8, 2005

266

200167251

7.

13130354

NITA SETH

Roopal Panchal

August 8, 2005

266

200167252

8.

13130362

UTPALL SETH

Roopal Panchal

August 8, 2005

266

200167253

9.

13130379

ABHIGNA SETH

Roopal Panchal

August 8, 2005

266

200167254

10.

13130387

BALWANT SETH

Roopal Panchal

August 8, 2005

266

200167255

11.

13130395

DEVARSHI SETH

Roopal Panchal

August 8, 2005

266

200167256

12.

13130409

GUMAN SETH

Roopal Panchal

August 8, 2005

266

200167257

13.

13130418

JHANKI SETH

Roopal Panchal

August 8, 2005

266

200167258

14.

13130426

LAGNI SETH

Roopal Panchal

August 8, 2005

266

200167259

15.

13130434

YASHU SETH

Roopal Panchal

August 8, 2005

266

200167260

16.

13130442

NIRUPAMA SETH

Roopal Panchal

August 8, 2005

266

200167261

17.

13130459

NITANSH SETH

Roopal Panchal

August 8, 2005

266

200167262

18.

13130467

SWATI SETH

Roopal Panchal

August 8, 2005

266

200167263

19.

13130475

ABHILASH SETH

Roopal Panchal

August 8, 2005

266

200167264

20.

13130483

BALWIR SETH

Roopal Panchal

August 8, 2005

266

200167265

21.

13130490

DEVASYA SETH

Roopal Panchal

August 8, 2005

266

200167266

22.

13130506

GUNISH SETH

Roopal Panchal

August 8, 2005

266

200167267

23.

13130514

JIGAR SETH

Roopal Panchal

August 8, 2005

266

200167268

24.

13130522

LAHAR SETH

Roopal Panchal

August 8, 2005

266

200167269

25.

13130539

YATNA SETH

Roopal Panchal

August 8, 2005

266

200167270

26.

13130547

NIRVI SETH

Roopal Panchal

August 8, 2005

266

200167271

27.

13130555

NITIN SETH

Roopal Panchal

August 8, 2005

266

200167272

28.

13130563

TRUSHIT SETH

Roopal Panchal

August 8, 2005

266

200167273

29.

13130570

ABHISHEK SETH

Roopal Panchal

August 8, 2005

266

200167274

30.

13130589

BANJUL

Roopal Panchal

August 8, 2005

266

200167275

31.

13130598

DEVENDRA SETH

Roopal Panchal

August 8, 2005

266

200167276

32.

13130602

GUNJAK SETH

Roopal Panchal

August 8, 2005

266

200167277

33.

13130619

JIGISH SETH

Roopal Panchal

August 8, 2005

266

120204845

34.

13130627

LAJJA SETH

Roopal Panchal

August 8, 2005

266

200167278

35.

13130635

YATRI SETH

Roopal Panchal

August 8, 2005

266

200167279

36.

13130643

NISAR SETH

Roopal Panchal

August 8, 2005

266

200167280

37.

13130650

DEPARV SETH

Roopal Panchal

August 8, 2005

266

200167281

38.

13130669

TUKHAR SETH

Roopal Panchal

August 8, 2005

266

200167282

39.

13130678

ADIP SETH

Roopal Panchal

August 8, 2005

266

200167283

40.

13130686

BANKIM SETH

Roopal Panchal

August 8, 2005

266

200167284

41.

13130694

DEVI SETH

Roopal Panchal

August 8, 2005

266

200167285

42.

13130717

JIMISH SETH

Roopal Panchal

August 8, 2005

266

200167287

43.

13130725

LAKENDRA SETH

Roopal Panchal

August 8, 2005

266

200167288

44.

13130733

YAVAN SETH

Roopal Panchal

August 8, 2005

266

200167289

45.

13130740

MIYA SETH

Roopal Panchal

August 8, 2005

266

200167290

46.

13130759

ROHINI SETH

Roopal Panchal

August 8, 2005

266

200167291

47.

13130768

TURANG SETH

Roopal Panchal

August 8, 2005

266

200167292

48.

13130776

ADITI SETH

Roopal Panchal

August 8, 2005

266

200167293

9.57. The allotted shares were immediately transferred from the afferent demat accounts to the demat account of Roopal Panchal (client ID 11920868) using DIS bearing continuous serial numbers as seen from the table above, all the events happening within Karvy DP's system. 9.58. Thus Karvy group entities were involved in all the activities of cornering of IPO shares by the key operators beginning from the introduction of bank account (no.54119 with BhOB Ahmedabad), the opening of demat account in NSDL, arrangement of finance from IOB, issue of consolidated Refund Order to IOB and making off-market transfers from the dematerialized accounts of fictitious/benami entities to the dematerialized accounts of the key operators. 9.59. Afferent Accounts Introduced by Karvy Group with BhOB Goregaon Branch

It was observed that Karvy had not only introduced bank accounts at BhOB, Ahmedabad and IOB, Thaltej branch but had also introduced bank accounts to BhOB Goregaon branch. Pradeep Bhogale, employee of Karvy Consultants Ltd. had introduced the following bank accounts with BhOB, Goregaon. 121 afferent dematerialized account-holders with Karvy DP had indicated these bank accounts introduced by KCL as their bank accounts. The details are given below: Sr. No.

9.60. From the above table, it may be seen that a few bank accounts held with BhOB, Goregaon branch resulted in numerous dematerialized accounts with Karvy DP. It is pertinent to note that Karvy DP had introduced these bank accounts. 9.61. Analysis of Afferent dematerialized accounts held with Karvy DP and their Characteristics During the course of SEBI investigations into the IPO related irregularities during 2003-2005 it was found that as many as 58,938 afferent dematerialized accounts had been opened with various DPs by the Key Operators for cornering the IPO shares. It was found that a substantial proportion of the afferent accounts identified by SEBI were held with Karvy DP and the details are given below: Name of Depository

9.62. Further, it was noticed that many of these afferent demat accounts had been opened on the same day with the address of the key operators shown as the address of fictitious / benami BOs. The details are as below:

9.63. From the above table, it may be seen that thousands of fictitious / benami dematerialized accouts were opened with Karvy DP with common addresses and thousands of such dematerialized accounts were opened on one single day. Karvy DP as per the SEBI guidelines relating to opening of dematerialized accounts was under a duty to exercise due diligence while opening the dematerialized accounts. That it did not do so shows that the obvious was apparently overlooked. It is clearly indicative that Karvy was aware of the existence of fictitious afferent accounts. 9.64. Charecteristics of the afferent dematerialized accounts In respect of the afferent dematerialized accounts opened with Karvy DP, various features that should have alerted the DP while opening the dematerialized accounts were noticed. 9.65. Afferent Accounts opened on the Same Date A sample of 50 afferent dematerialized accounts opened with Karvy DP on the same date i.e. July 19, 2005 is given below: Sr No

Source Client ID

Source DP ID

Source DP Name

Name Of Source Client Address Of Source Client Date Of Opening Of Demat Account Date Of Closure Of Demat (If Applicable) Account Status

9.66. It is seen that all the above afferent dematerialized accounts were opened on July 19, 2005. All the account holders had the same surname viz. "Jani". All the account holders had the same address i.e. 402 403 SHASWAT, OPP GUJARAT COLLEGE, ELLISBRIDGE, AHMEDABAD, 380006, which is the address of key operator viz. the Panchal family. The names of the account holders run in the same series from "Suresh" to "Aditi", as contained in the 50 names added to the IOB bank account no.12140, which has been discussed in detail in earlier paragraphs. 9.67. Pursuant to verification of the genuineness conducted by Karvy DP during November 2005 i.e. subsequent to the commencement of SEBI's preliminary enquiry into the matter, the DP had closed these dematerialized accounts. 9.68. Another sample of 50 such afferent accounts opened by Karvy DP for another key operator viz. the Jhaveri group on January 7, 2004 is given below:

Sr. No

Source Client ID

Source DP ID

Source DP Name

Name of Source Client Address of Source Client Date of Opening of Demat Account Date of Closure of Demat (If Applicable) Account Status

9.69. It may be seen that all the account holders had the address of C O K P JHAVER, 803 ABHIJIT, MITHAKALI CIRCLE ELLISBRIDG, AHMEDABAD, 380006, which is the address of a key operator viz. the Jhaveri group. Pursuant to verification of the genuineness conducted by Karvy DP during November 2005 i.e. subsequent to the commencement of SEBI's preliminary enquiry into the matter, the DP had closed these dematerialized accounts. 9.70. Afferent Accounts with the same Surname It was found that many of the afferent dematerialized account-holders had common surnames. A summary of some such common surnames are given below: Sr. No.

* - includes the set of 50 names from Suresh Seth to Aditi Seth as referred to earlier in various contexts. 9.71. From the above table, it may be seen that thousands of afferent dematerialized accounts were opened on a few dates. The thousands of the afferent account holders had a few common surnames. The address of the afferent dematerialized account- holders was indicated as the address of the key operator viz. Roopalben Panchal. 9.72. During November - December 2005, pursuant to verification of genuineness of the account holders in the wake of SEBI preliminary enquiry in the matter, Karvy DP had closed these dematerialized accounts.

9.73. The contention of Karvy DP that the applications were not received on the same date and because it follows a batch processing system, the dematerialized accounts were opened on the same day does not absolve it of its apparent failure to exercise due diligence while opening the dematerialized accounts. Further, even if the applications had not been received on a single day, it is clear that they would have been received around the same period and were processed by the DP on one or a few days. Further, admittedly, Karvy DP follows a batch processing system whereby many applications are verified, uploaded and activated en masse. Thus, when the DP had processed these applications together, it should have got alerted regarding the features of the applications as seen from the table above. In any case, as brought out by the discussions in this order, it was not mere failure to exercise due diligence that made Karvy to overlook these tell-tale signs. It is something more than that. 9.74. Examination of dematerialized accounts pending activation With regard to the dematerialized accounts that had been opened by Karvy DP and were pending for activation, during the course of the instant proceeding, Karvy DP was advised to submit the dematerialized account opening forms and the KYC documents. In this regard, Karvy DP vide letter dated June 8, 2007 stated that "The demat account opening forms pertaining to the clients of the sub broker Grace Consultancy, which are pending for activation, are not available with us as the same were returned back to the sub broker for complying with the required documentation at that point of time". From the submission of Karvy DP it can be deduced that when the DP entered the details in the CDSL system and generated BO IDs, the documentation in respect of the dematerialized accounts was either incomplete or absent. Though the DP may argue that the dematerialized accounts were not activated, it is clear that the DP opened dematerialized accounts on the basis of incomplete / non-existent documents. In the face of such fait accompli, the plea that the documents were incomplete and hence returned to the 'sub-broker' does not cut much ice. 9.75. Further, an examination of the details of these 10,000 dematerialized accounts shows that the account holders had 10 common surnames in sets of 1000 each. Further all these account holders had their bank accounts with Indian Overseas Bank. The details are as below:

Sr. No.

Starting Name

Last Name

No of accounts

Date of opening

IOB Bank account No Remarks

1.

KUNAL KAPUR

RITU KAPUR

1000

22-Sep-05

2611-15001 to 2611-16000 Account opening forms returned

2.

KUNAL TATED

RITU TATED

1000

22-Sep-05

2611-16001 to 2611 - 17000 Account opening forms returned

3.

KUNAL KELA

RITU KELA

1000

22-Sep-05

2611-17001 to 2611-18000 Account opening forms returned

4.

KUNAL SEN

RITU SEN

1000

22-Sep-05

2611-18001 to 2611-19000 Account opening forms returned

5.

KUNAL ROY

RITU ROY

1000

22-Sep-05

2611-19001 to 2611-20000 Account opening forms returned

6.

KUNAL IRANI

RITU IRANI

1000

22-Sep-05

2611-20001 to 2611-21000 Account opening forms returned

7.

KUNAL JHA

RITU JHA

1000

22-sep-05

2611-21001 to 2611-22000 Account opening forms returned

8.

KUNAL MEHTA

RITU MEHTA

1000

22-sep-05

2611-22001 to 2611-23000 Account opening forms returned

9.

KUNAL DAS

RITU DAS

1000

22-sep-05

2611-23001 to 2611-24000 Account opening forms returned

10.

KUNAL PRASAD

RITU PRASAD

1000

22-sep-05

2611-24001 to 2611-25000 Account opening forms returned Total

10000

9.76. The details of 50 such accounts on a sample basis is given below. It may be mentioned that as per the demat records all the account holders mentioned in the table below had their Savings Bank account with IOB, Stadium Road Branch. BOID

AccOp Date

BOName

BO Add

BOCity

BOPin

DPName

Ben BankMICR

Ben Bank AccNo

1301440000399716

22092005

KUNAL KAPUR.

Office No.402, Shashwat Bldg. Nr. Hotel Kanak Ellisbridge AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15001

1301440000399720

22092005

BAKULA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15002

1301440000399735

22092005

GRAHI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15003

1301440000399741

22092005

JAYSHREE KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15004

1301440000399754

22092005

KUNJ KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15005

1301440000399769

22092005

YAGNA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15006

1301440000399773

22092005

NIRAV KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15007

1301440000399788

22092005

NISHA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15008

1301440000399792

22092005

RAMESH KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15009

1301440000399809

22092005

AAKASH KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15010

1301440000399813

22092005

BALA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15011

1301440000399828

22092005

DEV KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15012

1301440000399832

22092005

GRASHIT KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15013

1301440000399847

22092005

JEET KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15014

1301440000399851

22092005

KUNJAL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15015

1301440000399866

22092005

YAJAN KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15016

1301440000399870

22092005

NIRBHAY KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15017

1301440000399885

22092005

NISHANT KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15018

1301440000399891

22092005

RANI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15019

1301440000399906

22092005

AANSHI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15020

1301440000399910

22092005

BALCHAND KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15021

1301440000399925

22092005

DEVAN KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15022

1301440000399931

22092005

GRISHA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15023

1301440000399944

22092005

JEEVAN KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15024

1301440000399959

22092005

KUNTI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15025

1301440000409461

22092005

VIRAJ KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15976

1301440000409476

22092005

BADAL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15977

1301440000409480

22092005

DAXESH KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15978

1301440000409495

22092005

GIRISH KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15979

1301440000409501

22092005

JAVAL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15980

1301440000409516

22092005

KOMAL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15981

1301440000409520

22092005

UDAYA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15982

1301440000409535

22092005

MINA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15983

1301440000409541

22092005

SUMIT KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15984

1301440000409554

22092005

RAKESH KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15985

1301440000409569

22092005

BADREN KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15986

1301440000409573

22092005

DAYA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15987

1301440000409588

22092005

GIRISHA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15988

1301440000409592

22092005

JAY KAPUR

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15989

1301440000409609

22092005

KONY KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15990

1301440000409613

22092005

UDHBHAV KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15991

1301440000409628

22092005

MINAKSHI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15992

1301440000409632

22092005

SUNIL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15993

1301440000409647

22092005

RAKHI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15994

1301440000409651

22092005

VIRAL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15995

1301440000409666

22092005

BADRI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15996

1301440000409670

22092005

DIPTI KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15997

1301440000409685

22092005

SAUNIL KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15998

1301440000409691

22092005

DIYA KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-15999

1301440000409706

22092005

RITU KAPUR.

Same as above

AHMEDABAD

380006

KARVY STOCK BROKING LIMITED 380020011

2611-16000

9.77. From the above table, it may be seen that the above dematerialized accounts were opened in bulk on the same date and have the same address. The account holders had common surnames. Further, it is seen that the dematerialized account holders have bank accounts with consecutive numbers. 9.78. Further, as narrated in a later paragraph, the characteristics of the above account holders matches that of the clients financed by KCL through IPO finance provided to key operators who were sub-brokers of KSBL for IPO distribution. In this regard, I note that SEBI in the interim order dated April 27, 2006 had indicated "accounts opened but not activated. Probably were meant to be used later". Karvy DP in its reply dated May 09, 2006 to the observations of the interim order had stated "This observation itself is indicative of the bias against us by you. The observations is in the realm of conjectures, surmises and hypothesis and is totally unjustified and uncalled for." Thus, the earlier inference of SEBI that the 10,000 dematerialized accounts indicated in the table above were meant to be used in subsequent IPOs appears to be correct. 9.79. Examination of Demat Accounts closed by Karvy DP Karvy-DP vide e-mail dated January 30, 2006 furnished the details of accounts closed by Karvy-DP where 20 or more dematerialized account-holders share common addresses. Upon perusal of the information it is seen that Karvy-DP has closed 38,409 accounts held with CDSL and 30,221 accounts held with NSDL. Prior to these closures Karvy-DP had 43,327 BO accounts with CDSL and 7,56,886 BO accounts with NSDL. Thus, it is seen that about 90% of the CDSL accounts held with Karvy-DP have been closed in the course of verification of genuineness of account-holders. Upon examining the details of the dematerialized accounts closed by Karvy-DP (taking address 1 as the basis for analysis), the following observations emerge: Sr. No.

Address

No. of dematerialized account-holders sharing the address Name of the Depository Comments

This address is same as that of Seksaria 9.80. From the above table relating to demat accounts closed by Karvy DP, it is seen that Karvy DP had opened numerous (running into many hundreds) demat accounts with common addresses, the common addresses being that of Karvy DP's sub-brokers namely Grace Consultancy, C/o Dipak Panchal, who is the husband of Devangi Panchal and the brother-in-law of Roopalben Panchal, Arth Realty Pvt. Ltd. (related to SEIPL), Purshottam Budhwani and Manojdev Seksaria. 9.81. Other observations regarding dematerialized accounts opened with Karvy DP In view of the cornering of retail portion of IPO shares observed in the case of Yes Bank IPO and the fact that almost all the afferent dematerialized accounts that were used for the cornering were held with Karvy DP, SEBI advised the depositories to conduct inspection of the DP and submit report to SEBI. Based on the inspection report of CDSL, it was noticed that BhOB has issued letters, which showed that multiple bank accounts have been opened by same person (same photograph) with different names and possessing the same or similar address. Some of such cases are listed below: Multiple bank accounts opened with same photograph Sr. No.

Name

A/c no. with BhOB

Name

A/c no. with BhOB

Name

A/c no. with BhOB

1

Bhagyesh Vania

9550-12175

Abhilash Rathi

9550-2068

Abhilash Desai

9550-1068

2

Darni Verma

9550-3909

Karina Desai

9550-1576

Aarti Zala

9550-10040

3

Agat Pathak

9550-8117

Bhadresh Vala

9550-7165

-

-

4

Aanshi Pandya

9550-20

Aanshi Rathi

9550-2020

-

-

5

Bablu Pathak

9550-8958

Aakash Verma

9550-3010

-

-

6

Abhishek Rathi

9550-2078

Abhishek Desai

9550-1078

-

-

7

Agni Pathak

9550-8137

Badren Barot

9550-6986

-

-

8

Akshar Bhatt

9550-9222

Bablu Patil

9550-13958

-

-

9

Bhadresh Desai

9550-1165

Bhadresh Rathi

9550-2165

-

10

Aditya Pandya

9550-107

Aakash Patil

9550-13010

-

-

11

Abhilash Verma

9550-3068

Agat Pandya

9550-117

-

-

12

Agat Rathi

9550-2117

Agat Desai

9550-1117

-

Demat accounts opened with Karvy DP for the aforesaid account holders Sr.No

Name

BOlD

Name

BOlD

Name

BOlD

1

Bhagyesh Vania

78034

Abhilash Rathi

126968

Abhilash Desai

116966

2

Dami Verma

145379

Karina Desai

122049

Aarti Zala

56681

3

Agat Pathak

187451

Bhadresh Vala

177937

4

Aanshi Pandya

106487

Aanshi Rathi

126480

5

Bablu Pathak

195861

Aakash Verma

136385

6

Abhishek Rathi

127066

Abhishek Desai

117064

7

Agni Pathak

187656

Badren Barot

176141

8

Akshar Bhatt

198501

Bablu Patil

95869

9

Bhadresh Desai

117936

Bhadresh Rathi

127938

10

Aditya Pandya

107351

Aakash Patil

86383

11

Abhilash Venna

136961

Agat Pandya

107457

12

Agat Rathi

127450

Agat Desai

117459

-

9.82. In cases of letters of Vijaya Bank (VB) accepted by Karvy DP towards POI and POA for opening demat accounts, it was observed that the signature column of the branch manager consisted of just 'two ticks' and apparently such impression does not appear to constitute a bonafide signature. 9.83. Demat Accounts opened with POI and POA In case of accounts opened by Karvy DP on the basis of the letters issued by VB, it was observed that in many instances the date of opening of the BO account was much earlier than the date of issue of such letter issued by VB. Some of such instances are mentioned as under: BOlD

Date of account opening Date of POI & POA from Vijaya Bank 390669

27/8/05

08/09/05

389826

14/7/05

08/09/05

390181

17/8/05

08/09/05

390329

17/8/05

08/09/05

390293

17/8/05

08/09/05

390071

17/8/05

08/09/05

390196

17/8/05

08/09/05

390202

17/8/05

08/09/05

390221

17/8/05

08/09/05

389923

17/8/05

08/09/05

390240

17/8/05

08/09/05

391170

27/8/05

08/09/05

9.84. Different BOs with same signatures It was observed that the signature of the different BOs substantially match with each other. Some of the instances are as under: Sr. No

BOID

Name

BOID

Name

BOID

Name

1

108159

Hari Pandya

188153

Hari Pathuk

158158

Hari Trivedi

2

168151

Hari Barot

178151

Hari Vala

118150

Hari Desai

3

392856

Munny B Gupta

390859

Munni B Maniar

382854

Munni B Chokshi

4

143825

Jacky Verma

73821

Jacky Rathod

93823

Jacky Patil

5

227392

Dani D Pritam

227559

Dani D P (different person) ----

----

6

171842

Fida Barot

111841

Fida Pandya

----

----

7

111744

Fenil Pandya

121746

Fenil Desai.

-----

----

8

61645

Fena Zala

81649

Fena Vania

181641

Fena Vala

9

202046

Karina Bhatt

152044

Karina Gandhi

172048

Karina Barot

9.85. Consolidated Payment of account charges for various demat accounts:

The inspection of Karvy DP by SEBI revealed that the DP had accepted third party cheques for dues payable by various BOs. In case of 225 accounts, Karvy DP had accepted a single cheque (Cheque Number 273329 issued by HDFC Bank Navranpura, Ahmedabad) towards their dues. Similarly in case of 1276 accounts a single cheque (Cheque Number 699328 issued by HDFC Bank, Navrangpura, Ahmedabad) was accepted by Karvy DP. It was further observed that the DP had issued a single receipt in case of the amount paid on behalf of various accounts. Similarly in various accounts of Panchal Family/group a single consolidated cheque had been deposited by a third party on behalf of these account holders to settle the outstanding dues. Such practices are at variance with the market practices and clearly demonstrate tha Karvy DP knew for certain that it was only dealing with Roopalben Panchal or other key operators while purporting to deal with others on paper.

9.86. Based on information furnished to SEBI by Karvy DP vide letter dated June 8, 2007, it is seen that Karvy DP had accepted consolidated payments from key operators towards AMC charges and transaction charges of numerous dematerialized accounts held with the DP. The details are given below:

CHEQUE COLLECTION AMOUNT (PANCHAL) Total

AMC Charges

Transactions Charges Sl No.

Chq_No.

Date

Bank Name

No of Accounts

Amount

No of Accounts

Amount

No of Accounts

Amount

1

627986

12-May-03

HDFC

4

2743.00

4

2743.00

2

907406

12-May-03

HDFC

3

2449.00

3

2449.00

3

907407

12-May-03

HDFC

1

780.00

1

780.00

4

984761

12-May-03

HDFC

1

1589.00

1

1589.00

5

6278986

12-May-03

HDFC

1

192.00

1

192.00

6

774641

12-May-03

ICICI

1

324.00

1

324.00

7

780184

12-May-03

ICICIC

1

371.00

1

371.00

8

749833

12-May-03

VIJAYA

1

316.00

1

316.00

9

417618

22-Aug-03

HDFC BANK

1

146.00

1

146.00

10

766900

09-Sep-03

VIJAYA

1

150.00

1

150.00

11

273329

24-Oct-03

HDFC BANK

225

11250.00

225

11250.00

12

699328

24-Dec-03

HDFC BANK

1277

63850.00

1277

63850.00

13

699329

24-Dec-03

HDFC BANK

600

30000.00

600

30000.00

14

815625

24-Mar-04

BANK OF BARODA

1

119.32

1

119.32

15

144388

31-Mar-04

BOBL

1334

200000.00

1334

200000.00

16

394242

10-Jun-04

HDFC BANK

1

2600.00

1

2600.00

17

774588

24-Jul-04

ICICI

1

319.62

1

319.62

18

907683

24-Jul-04

ICICI

1

439.03

1

439.03

19

941364

24-Jul-04

ICICI

1

883.58

1

883.58

20

955211

24-Jul-04

ICICI

926

100000.00

926

100000.00

21

853131

24-Jul-04

SCB

1

966.12

1

966.12

22

853128

24-Jul-04

SCB

1

191.64

1

191.64

23

853129

24-Jul-04

SCB

1

110.43

1

110.43

24

853130

24-Jul-04

SCB

1

256.83

1

256.83

25

865238

24-Jul-04

SCB

1

198.06

1

198.06

26

984167

24-Jul-04

SCB

1

124.20

1

124.20

27

984168

24-Jul-04

SCB

1

135.34

1

135.34

28

984171

24-Jul-04

SCB

1

1162.14

1

1162.14

29

984172

24-Jul-04

SCB

1

477.36

1

477.36

30

985719

24-Jul-04

SCB

1

254.89

1

254.89

31

986122

24-Jul-04

SCB

1

526.72

1

526.72

32

984169

24-Jul-04

SCCB

1

126.24

1

126.24

33

984170

24-Jul-04

STANDARD CHARTERED

1

316.45

1

316.45

34

749844

24-Jul-04

VIJAYA

1

180.49

1

180.49

35

955249

19-Aug-04

ICICI BANK

2507

300000.00

2507

300000.00

36

152462

25-Aug-04

BOBL

566

56600.00

566

56600.00

37

151219

19-Nov-04

STANDARD CHARTERED

428

295500.00

428

295500.00

38

623168

21-Jan-05

hdfc bank

171

45000.00

171

45000.00

39

774593

25-J an-05

ICICI

1

211.58

1

211.58

40

907688

25-Jan-05

ICICI

1

380.19

1

380.19

41

936348

25-J an-05

ICICI

1

928.99

1

928.99

42

940881

25-Jan-05

ICICI

1

232.52

1

232.52

43

941368

25-J an-05

ICICI

1

631.45

1

631.45

44

943874

25-J an-05

ICICI

4

1078.78

4

1078.78

45

962365

25-J an-05

ICICI

1

1147.18

1

1147.18

46

940692

25-J an-05

ICII

4

3389.79

4

3389.79

47

984188

25-Jan-05

SCB

1

284.32

1

284.32

48

749850

25-J an-05

VIJAYA

1

160.89

1

160.89

49

64640

28-Mar-05

SBI

1

327.00

1

327.00

50

815633

29-Mar-05

BOB

1

495.40

1

495.40

51

35625

09-Jun-05

VIJAYA BANK

1

414.00

1

414.00

52

983781

12-Jul-05

ICICI

2778

300000.00

2778

300000.00

53

426709

10-Nov-05

SBI

1

586.70

1

586.70

54

40553

29-Nov-05

CIT! BANK

1

520.00

1

520.00

55

80498

29-Nov-05

CIT! BANK

1

500.00

1

500.00

56

41747

22-Dec-05

VIJAYA BANK

1

496.00

1

496.00

Total

10869

1432433.25

10213

1061700.00

656

370733.25

CHEQUE COLLECTION AMOUNT (JHAVERI) Total

AMC Charges

Transactions Charges Sr. No

ChCl-No.

Date

Bank Name

No of Accounts

Amount

No of Accounts

Amount

No of Accounts

Amount

1

36442

11-Dec-03

SIDDHI COOP BANK

3

300.00

3

300.00

2

497953

11-Dec-03

VIJAYA BANK

49

4900.00

49

4900.00

3

500376

08-J an-04

VIJAYA BANK

150

15000.00

150

15000.00

4

604590

08-J an-04

VIJAYA BANK

149

14900.00

149

14900.00

5

604855

08-J an-04

VIJAYA BANK

149

14900.00

149

14900.00

6

605500

08-J an-04

VIJAYA BANK

150

15000.00

150

15000.00

7

272992

10-J an-04

HDFC BANK

75

7500.00

75

7500.00

8

976373

24-Jul-04

VIJAYA

1

20244.60

1

20244.60

9

906815

25-Aug-04

VIJAYA BANK

1000

100000.00

1000

100000.00

10

185223

08-Nov-04

BHARAT OVERSEAS

225

22500.00

225

22500.00

11

909880

08-Nov-04

VIJAYA BANK

2500

250000.00

2500

250000.00

12

909888

18-Nov-04

VIJAYA BANK

800

80000.00

800

80000.00

13

269230

25-Jan-05

HDFC

179

16800.00

179

16800.00

14

269231

25-Jan-05

HDFC

466

41751.64

466

41751.64

15

287528

25-Jan-05

HDFC

564

33600.00

564

33600.00

16

287529

25-Jan-05

HDFC

714

33660.00

714

33660.00

17

287530

25-J an-05

HDFC

2570

128996.25

2570

128996.25

18

255190

31-Mar-05

HDFC

174

11124.69

174

11124.69

19

255393

31-Mar-05

HDFC

204

12777.69

204

12777.69

20

255789

31-Mar-05

HDFC

148

14182.74

148

14182.74

21

390999

31-Mar-05

HDFC

506

11157.75

506

11157.75

22

891948

31-Mar-05

VIJAYA

4150

122322.00

4150

122322.00

23

906878

31-Mar-05

VIJAYA

2436

78517.50

2436

78517.50

24

266069

25-May-05

VIJAYA BANK

1

1114.76

1

1114.76

25

906895

25-May-05

VIJAYA BANK

1

28381.69

1

28381.69

26

417645

17 -Nov-05

HDFC

3787

275500.00

3787

275500.00

27

417646

17 -Nov-05

HDFC

6771

206625.00

6771

206625.00

28

127526

02-Dec-05

BOB

1

86.16

1

86.16

Total

27923

1561842.47

5250

525000.00

22673

1036842.47

9.87. Summary of observations on the demat account holders of Karvy DP Keeping in view of the discussions regarding the dematerialized accounts opened by Karvy DP, the following conclusions emerge: 9.88. Thousands of dematerialized accounts were opened with Karvy DP on the same date. Many of these afferent accounts had common surnames. The addresses of the thousands of dematerialized account-holders were indicated as the addresses of the key operators. In many instances, bank letters were accepted towards POI and POA. Karvy itself had introduced the bank accounts of the dematerialized account- holders. In certain instances, dematerialized accounts had been opened without obtaining POI and POA. In certain instances, same photographs were used by various BOs. In other instances, many BOs had the same signatures. Karvy DP had accepted consolidated payments from the key operators towards numerous dematerialized accounts maintained with the DP. As discussed elsewhere in this order, Karvy DP had executed synchronized off-market transfers from the afferent dematerialized accounts to the dematerialized accounts of the key operators using pre-printed DIS and in certain cases even without the DIS. Pursuant to the verification conducted in the wake of SEBI preliminary enquiry in the matter of IPO irregularities, Karvy had closed these dematerialized accounts. Thus, it emerges that these dematerialized account-holders whose accounts were held with Karvy DP were fictitious / benami in nature and that Karvy was aware of it. 9.89. From the above, it is seen that Karvy DP has admitted that it did not do any KYC related verification while opening demat accounts and relied on the sub-brokers for the same. In the criminal complaint, Karvy has admitted that these sub-brokers / key operators had opened demat accounts in fictitious names. 9.90. The IPO financing provided by the Karvy to the afferent dematerialized account- holders was released to the key operators and no money was released to the ficititious / benami entities. The funds for IPO applicantions in the names of the afferent demat account holders came from the bank accounts of the key operators / sub-brokers of Karvy and not from the afferent dematerialized account-holders / IPO applicants. Similarly the refund money also went to the bank accounts of the key operators only. 9.91. From the above, it is logical to conclude that the thousands of dematerialized account-holders whose demat accounts had been opened with Karvy DP were fictitious / benami in nature and that Karvy was aware of the same.

9.92. Reliance on 'sub-brokers' for KYC verification In terms of SEBI circulars dated August 4, 2000 and August 24, 2004, the KYC verifications for the purpose of opening dematerialized accounts are required to the carried out by the DP. The SEBI circular ref: MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 specifically states that "While opening a BO Account, the DPs are required to exercise due diligence while establishing the identity of the person to ensure the safety and integrity of the depository system." 9.93. With regard to the KYC verification done by it while verifying the identity of the person, Karvy DP has claimed that it relied on sub-brokers appointed by it for carrying out the verification process. This is in contravention of the SEBI circular which places the onus on the DP to exercise due diligence while establishing identity of the person opening the demant account. Also, I do not find merit in the contention of Karvy DP for the following reasons: 9.94. In terms of Regulation 52 of SEBI (Depositories and Participants) Regulations, 1996, "No Participant shall assign or delegate its functions as participant to any other person, without the prior approval of the depository." In the instant case, there is nothing on record to suggest that Karvy DP had obtained the permission of depositories to assign or delegate its function of carrying out KYC verifications while opening demat accounts to its purported sub-brokers. Further, it may be noted that in terms of SEBI (DP) Regulations, there is no concept of sub-broker. 9.95. Process flow adopted by Karvy DP for opening Demat Accounts The process flow adopted while opening dematerialized accounts by Karvy DP for KYC compliance in respect of applications procured through sub-brokers, as per submissions of Karvy vide letter dated January 19, 2007 before the Enquiry Officer is given below: (Editor: The text of the vernacular matter has not been reproduced. required.)

9.96. From the above, it may be seen that as per the process flow detailed by Karvy -DP, it needs to verify the KYC documents procured through the sub-brokers, while opening dematerialized accounts. 9.97. In another proceeding in the matter of IPO irregularities, Karvy has produced a letter dated June 8, 1999 issued to a key operator namely Shri Purshottam Budhwani to substantiate their claim that the key operator was a sub-broker who procured demat clients for Karvy DP. Upon perusal of the letter, it is observed that the letter has been issued by Karvy Securities Ltd. intimating the allotment of sub- broker code no.42338 to Shri Purshottam G Budhwani. The letter mentions that "We will inform you the rate of sub broker payable to you for each issue separately." (emphasis supplied). Thus, a prima facie reading of the letter issued by Karvy Securities Ltd. suggests that Shri Budhwani was expected to operate as a sub-broker of Karvy Securities Ltd. for the purpose of procuring applicants in public issues. Though Karvy might argue now that the word 'issue' should be construed in its broader sense, I am of the view that the word 'issue' needs to be given an interpretation in the context in which it appears i.e. in the context of Karvy Securities Ltd. being an IPO broker. Therefore, it follows that Karvy Securities Ltd., as an IPO broker, had appointed Shri Budhwani as a sub-broker and assigned him a sub-broker code. It does not lie in the mouth of Karvy to claim now that it had appointed Shri Budhwani as a sub-broker for its DP operations. In any case, as noted earlier, there is no concept of sub-broker with regard to the activities of DP.

9.98. Further, in terms of the process flow for opening dematerialized accounts as per Karvy DP's own submissions also shows that the DP was required to conduct KYC verification in respect of the demat clients procured through the sub-brokers. 9.99. Considering the above, Karvy DP's claim of having relied on purported sub- brokers that are neither registered with SEBI nor recognized in law for carrying out the obligations relating to KYC verifications imposed upon Karvy DP as a SEBI registered Depository Participant, rings hollow and the same deserves to be dismissed in toto. In any event the DP cannot palm off its duties under the regulations to anyone else. 9.100. Role of KCL - IPO Financier The next step in the IPO process after the opening of bank accounts and dematerialized accounts is arrangement of IPO finance. It was found that for the purpose of arranging IPO finance for its demat clients, Karvy DP had tied up with BhOB during June 2003. The details of IPO financing done by BhOB in various IPOs pursuant to the tie-up with Karvy is given below: IPOs financed by BHOB Name of IPO

9.101. From the above table, it is seen that pursuant to the arrangement with Karvy, BHoB provided IPo finance to 725 IPO applicants in the Maruti IPO that came during June 2003. Thereafter, the number of applications and the amount financed by BHoB increased as seen in the IPOs of Indraprastha Gas Ltd. (December 2003) wherein 4631 IPO applicants were financed by BHoB and Patni Computer Systems Ltd. (February 2004) wherein 10386 applicants were financed by BHoB. In this context, it may be recalled that pursuant to the arrangement with BHoB, Karvy had introduced the account holders to BHoB, based on which, they were able to obtain IPO finance from the Bank. 9.102. Thereafter, during October 2004 and March 2005, Karvy had introduced the key operators to Indian Overseas Bank, Ahmedabad and had also introduced fictitious joint account holders whose names were added to the IOB Bank accounts of the key operators. Based on the same, the key operators were able to obtain IPO finance from IOB also as in the case of BHoB.

9.103. Apparently, after having introduced the key operators and the afferent account holders to the banks during 2003, 2004 and the first quarter of 2005 as mentioned above, during July 2005, a Karvy group entity (Karvy Consultants Ltd., an NBFC) had provided IPO finance to the afferent account holders by extending IPO finance to the Key Operators.

9.104. Based on Annexure A of Karvy Consultants Ltd's reply dated May 9, 2006 to the SEBI interim order dated April 27, 2006, it is seen that KCL, an NBFC, had provided IPO finance to the following key operators in the IPOs listed below: ROOPAL PANCHAL KCL FUNDING DETAILS IN VARIOUS ISSUES Issue

Chq No.

Margin

Chq No.

disbursement

Loan

Chq No.

Repayment

Chq No.

Interest

IDFC

484887

61880000

RTGS

247520000

185640000

777196

185640000

484887

3640000

SASKEN

0

891062

20000000

260000000

269105

112500000

623077

2030140

891063

20000000

269106

57500000

891064

20000000

TFR TO AMAR

90000000

891065

20000000

891066

20000000

891067

20000000

891068

20000000

891069

20000000

891070

20000000

891071

20000000

891072

20000000

891073

20000000

891074

20000000

AMAR

RTGS

208900000

298900000

RTGS

298900000

623077

2333877

TFR FM SASKEN

90000000

MANOJ SEKSARIA KCL FUNDING DETAILS IN VARIOUS ISSUES Issue

Chq No.

Margin

Chq No.

disbursement

Loan

Chq No.

Repayment

Chq No.

Interest

Int. TDS

ILFS

723248

2161250

530271

20000000

19451250

763602

19451250

723249

117798

34082

530272

1612500

IDFC

763603

9800000

891127

20000000

80920000

624990

19040000

763608

490056

141785

763604

4400000

891128

20000000

628989

19040000

763617

10955

3169

763605

80000

891129

17120000

763606

38318000

891130

19040000

763607

4522000

891131

19040000

SASKEN

763616

9100000

891143

20000000

172900000

800783

9000000

891144

20000000

800780

20000000

891145

20000000

800776

20000000

891146

20000000

763624

20000000

891147

20000000

763623

20000000

891148

20000000

800778

20000000

891149

20000000

800779

20000000

891150

20000000

763625

20000000

891172

20000000

800777

20000000

891173

2000000

763642

3900000

SUZLON

800799

4993920

891214

20000000

44945280

800752

37500000

723195

272154

78752

891215

20000000

723194

5439200

891216

9939200

800762

2000000

Recon

6080

PURUSHOTTAM BUDHWANI KCL FUNDING DETAILS IN VARIOUS ISSUES Issue

Chq No.

Margin

Chq No.

disbursement

Loan

Chq No.

Repayment

Chq No.

Interest

Int. TDS

IDFC

276018

11280000

891152

20000000

80920000

276024

39032000

276027

490056

141785

276019

3000000

891153

20000000

768077

19040000

276032

9224

2669

891154

17120000

738076

19040000

891155

19040000

276025

3808000

891156

19040000

SASKEN

276031

9100000

891175

20000000

172900000

242163

4300000

242174

104709

2

302949

891176

20000000

242153

20000000

891177

20000000

242154

20000000

891178

20000000

242155

20000000

891179

20000000

242156

20000000

891180

20000000

242173

80000000

891181

20000000

242166

8600000

891182

20000000

891183

20000000

891174

2000000

SUZ

800799

4993920

891214

20000000

44945280

800752

37500000

723195

272154

78752

LON

891215

20000000

723194

5439200

891216

9939200

800762

2000000

6080

PARAG JHAVERI KCL FUNDING DETAILS IN VARIOUS ISSUES Issue

Chq No.

Margin

Chq No.

disbursement

Loan

Chq No.

Repayment

Chq No.

Interest

IDFC

287559

11900000

RTGS

101150000

75862500

982650

75862500

287561

1487500

287560

700000

287562

87500

287566

12600000

SASKEN

6500000

891076

45500000

39000000

266141

39000000

600000

9.105. Observations on IPO Financing by Karvy: From the above table, it may be seen that as per Karvy's submissions, it had provided IPO finance to Roopalben Panchal in the IPOs of IDFC, Sasken and Amar Remedies. For instance, in the case of IDFC, Karvy had provided IPO finance of Rs. 18,56,40,000 i.e.Rs. 18.56 crores to Roopalben Panchal. Based on the IPO loan agreement dated July 21, 2005 entered into between Karvy Consultants Ltd. and Roopalben Panchal, it is seen that Karvy had provided IPO finance to Roopalben Panchal to apply for 7280000 shares in IDFC IPO. Shri Mayur Modi and Shri Aditya Gupta, employees of Karvy had acted as references for Roopal Panchal. 9.106. It is seen that the disbursement of the loan was made by Karvy through RTGS transfer to the IDFC escrow account. Vide its letter dated May 19, 2007, KSBL had submitted that an amount of Rs. 51,90,78,000 i.e. Rs. 51.90 crores was transferred to the escrow account of ICICI who were bankers to the issue of IDFC. The amount was in respect of 10,900 applications which were being financed by KCL as an NBFC. The amount of Rs. 51,90,78,000 was inclusive of Rs. 12,97,69,500 i.e. 12.97 crores, being the amount collected from various loan applicants as margin money.

9.107. It is seen that in the case of Sasken IPO, Karvy did not take any margin from Roopalben Panchal. Karvy had provided 100% IPO finance of Rs. 26 crores to Roopalben Panchal. Further, Karvy had transferred Rs. 9 crores out of the refund money of Sasken IPO for making application in the IPO of Amar Remedies on behalf of Roopalben Panchal. In addition, Karvy had made RTGS transfer of Rs. 20.89 crores in the IPO of Amar Remedies towards IPO loan given to Roopalben Panchal. In this regard Karvy DP in its reply dated May 19, 2007 has stated that "it may however, be noted that the margin amount was not transferred to KCL, but only the loan amount was disbursed to the loanee, who inturn has deposited the total amount inclusive of the margin amount to the escrow account of the issuer." In the normal course of IPO finance the financier collects the margin amount from the borrower and issues cheque / DD favourig the escrow account for the application money. This practice is adopted to ensure that the loan money is utilized only for the purpose of making IPO application. That KCL, instead of adopting the normal practice as above, released the loan amount directly to the key operator (Roopal Panchal) shows that Karvy had full control over the manner of application of funds. In this regard, I note that RBI has issued guidelines to NBFCs regarding Customer identification procedures and KYC norms to be followed by them. 9.108. Similarly, it is seen that Karvy had provided IPO finance to various other Key Operators, namely, Manoj Seksaria, Purushottam Budhwani a nd Parag Jhaveri in respect of various IPOs namely, ILFS, IDFC, Sasken and Suzlon. As regards the financing by KCL to Purshottam Budhwani, it was found that KCL had disbursed the loan amount many days after the closure of the IDFC IPO. In this regard KSBL in its reply dated May 19, 2006 has stated that "we had received the margin subsequently. It is submitted that the margin was received by KCL on the date of closure of the issue. It is reiterated that KCL had not disbursed the loan amount to Purshottam Budhwani, since KCL had not received the margin." In this regard it is noted that KSBL, the stock broker, had bid the IDFC IPO application forms pertaining to Purshottam Budhwani on the last day of the issue i.e. July 22, 2005. Apparently the cheques attached to the application forms were encashed a week later i.e. after the disbursal of the loan money by KCL. 9.109. Based on the data furnished by Karvy Consultants Ltd. (KCL) in its letter dated May 9, 2006, it was seen that KCL had granted IPO financing to 5200 individual applicants on the strength of loan applications purportedly received from them in regard to the IPO of IDFC. When KSBL was asked to furnish copies of all 5200 loan applications in the course of personal hearing, it pointed out that all the original loan applications were seized by CBI in the course of search and seizure operation and were lying in the custody of CBI. SEBI has obtained sample copies of some of the request letters for sanction of IPO funding from CBI. A perusal of these request letters reveals that each such document consists of two pages and comprises Request Letter for Sanction of Loan, Receipt of Loan, and Letter to the Bank to debit the account of the account holder / loan applicant and Promissory Note in favour of KCL. As per these documents, the salient features of IPO funding to these 5200 loan applicants are as under: The cheque for the loan amount was issued in favour of each individual applicant. KCL was authorized to credit the bank account of each applicant towards refund for the said IPO directly and debit each bank account subsequent to receipt of refunds towards principal amount as well as interest etc.

The loan amount was advanced for a period of 15 days from July 22, 2005 which was the last day of currency of IDFC IPO. 9.110. However, it is a matter of record that no separate cheques were issued by KCL towards the loan amount in favour of individual applicants presumably because KCL was very well aware that the SB Account Nos. mentioned in the said 5200 loan applications did not exist at all. It was for this reason again that individual refund orders for crediting the respective bank accounts of the said 5200 loan applicants were not issued by Karvy RTI pursuant to allotment in the IPO of IDFC and in lieu thereof, consolidated refund orders were issued. A scrutiny of the said Request Letters and other loan documents brings out that:

The SB Account Nos. of the applicants were shown as 9550-1, 9550-2, 9550-3, 9550-4 and so on with the BhOB, Ellisbridge, Ahmedabad. The cheque number for the loan amount granted by KCL was not mentioned on any of the Receipts. There was no individual loan sanction letter issued by KCL to each applicant.

There was no mention of rate of interest on any of the Promissory Notes executed by each applicant. No interest has actually been paid to KCL by any of 5200 individual loan applicants. There was no mention of receipt of any margin from any of the individual applicants. The application amount for each application was Rs.47,600/- whereas the loan amount was Rs.35,700/- per application. In other words, the differential amount of Rs.11,900/- represented the margin amount (25%) to be contributed by each applicant. There is no evidence to suggest that KCL received margin moneys from any of the 5200 individual loan applicants. 9.111. KCL is also stated to have entered into another loan agreement with Roopal N Panchal on July 21, 2005 in the IPO of IDFC. The following points need to be considered in this regard: i) The loan applicant, Roopal N Panchal based at Ahmedabad made an application for loan to KCL, Hyderabad on July 21, 2005. KCL, Hyderabad sanctioned the said loan to her on the same day subject to her executing Agreement of Pledge, POA, Demand Promissory Note, Post Dated Cheques etc. which was also done on the same day. ii) There is nothing in the loan agreement with Roopal N Panchal to show that she had underwritten the loan for 5200 applicants. iii) The application was made by Roopal N Panchal for loan of Rs.18,56,40,000/- for applying in the IPO of IDFC wherein KCL "may be the second applicant". The amount of loan was required by Roopal N Panchal for the purpose of applying for 7280000 shares in the IPO of IDFC.

iv) A perusal of the loan sanction letter shows that the column of rate of interest is left blank. v) No disbursement of funds was made by KCL to any of 5200 individual loan applicants. vi) Subsequent to allotment, the refund money was given to Roopalben Panchal through a few consolidated refund orders. vii) Roopal N Panchal paid interest of Rs.36,40,000/- on loan of Rs. 18,56,40,000/- for a period of 15 days from the date of closure of issue i.e. 22.07.2005 although money was disbursed by KCL on 30.07.2005 till the date of allotment/ refund, i.e. 06.08.2005. This gives an interest rate of over 47% p.a. for a period of 15 days. No reasonable or prudent person would pay such exorbitant rate of interest, especially when he can avail of IPO finance from Bank/ NBFCs @ 14-15% p.a. Karvy has not been able to offer any explanation in this regard. KCL has admittedly charged 18% -19% p.a. from the Key Operators namely Purushottam Budhvani and Manoj Dev Seksaria. viii) Apparently, there were no efforts on the part of Karvy for ascertaining the identity of borrowers by way of photographs, identification documents etc. ix) Apparently, KCL did not take any steps to ascertain the credit worthiness of the borrowers. x) Also, Karvy made no attempt to obtain the correct address - permanent address of the loan applicants. 9.112. In effect, what emerges is that KCL funded Roopalben Panchal for making 5200 IPO applications in the IPO of IDFC. The so-called loan applications with 5200 individual loan applicants were nothing but just a make-believe.

9.113. Even if it is assumed for the sake of argument that the 5200 borrowers were real persons, it is hard to believe that the said 5200 loan applicants having the same address as Roopalben Panchal at Ahmedabad would approach KCL, Hyderabad for obtaining IPO finance @ 47%p.a. whereas they could have availed such finance locally on more reasonable terms.

9.114. A perusal of the Income-Tax returns of Roopalben Panchal shows that she had shown total income of Rs.76,760 and Rs.1,08,420 in her I.T. return for A.Y.s 200304 and 2004-05 respectively. With such meager income/ resources, it is hard to believe that any financier would have provided IPO finance to the tune of Rs.18,56,40,000/-to her. All these circumstances put a big question mark on the genuineness of the loan documentation as well as the loan transaction. A perusal of loan applications indicates that this was meant to be a single application for allotment of 26,78,500 shares to Roopal N Panchal presumably under the HNI category.

9.115. Based on documents submitted by Karvy, it is seen that Karvy Consultants Ltd. had provided loan of Rs. 4,85,52,000/- at 19% p.a. for a period of 15 days to a key operator namely Shri Purshottam Budhwani for making application in the IPO of IDFC Ltd. Karvy had specified a margin of Rs.85,68,000/- for the loan. 9.116. In the normal course of a financier providing IPO loan, the financier enters into an agreement with the borrower, collects the margin money from the borrower and issues a cheque / DD favouring the IPO escrow account for the full application money. The release of loan by way of cheque / DD favouring the escrow account ensures that the loan money is used only for the intended purpose of applying in the IPO and is not diverted / misused by the borrower for any other purpose. Further, a lien is noted on the demat account of the borrower to ensure IPO shares that get allotted are available as security for the loan and a lien is noted on the bank account to ensure refund money is available for adjustment against the loan. 9.117. In the case of purported IPO finance provided by Karvy Consultants Ltd. to the key operator, the loan money was apparently released directly to the key operator, who in turn divided the same for making numerous small value applications so as to be eligible for allotment in the retail category. The above leads to the possible inference that Karvy Consultants released the IPO finance to the key operator rather than issue a cheque favouring the escrow account, as is the normal practice, to enable the key operator to execute their gameplan of dividing the IPO finance into numerous IPO applications in the retail category. If Karvy Consultants was providing IPO finance in the normal course, it would necessarily issue a cheque favouring the escrow account to ensure that the borrower uses the money only for the purpose of IPO finance. In the instant case, Karvy Consultants, in order to enable the key operator to make multiple applications in fictitious / benami names, provided IPO finance directly to the key operator rather than to the escrow account. From this, it may be inferred that Karvy Consultants was aware of the intentions of the key operator and did its part to ensure that the key operator's gameplan got executed without a hitch. (Editor: The text of the vernacular matter has not been reproduced. required.)

9.118. DETAILS OF THE AFFERENT ACCOUNTS/ BANK ACCOUNTS OF KEY OPERATORS USED IN THE IPO OF IDFC FOR AVAILING FINANCE FROM BHOB / IOB / KCL Name of the Key Operator (Bank Account No.) No of afferent entities that were financed Address of the afferent account holder as per demat account Name of the Bank as per the demat records of the afferent accounts (significant for purpose of Refund) Finance availed from with BhOB/ IOB / KCL Roopal Panchal (55045) - BHOB (50795) - BHOB (54119)-BHOB IOB (15,107) KCL (5,200) 402-403, Shashwat, Opp Gujarat College, Ellisbridge, Ahmedabad - 380006 BHOB

9.119. It is seen from the above table that 36,051 afferent demat accounts (out of 49, 708 afferent accounts held with Karvy DP) were used in the IPO of IDFC where finance was availed from BhOB / IOB / KCL. It is relevant to note that majority of the afferent account holders had their bank accounts with BhOB which were introduced by Karvy (viz. SB Account Nos. 50795 and 54119). Karvy admittedly certified the signatures of the afferent account holders to IOB and also introduced the bank accounts of the Key Operator like Roopal Panchal who availed financed from IOB and thereafter KCL itself started financing these key operators. Thus, Karvy had initially introduced afferent account holders with BhOB (as per the Idea Paper in the IPO of Maruti Udyog Ltd.) in the month of June, 2003 and then in the month of December, 2003 and thereafter encouraged Key Operators to open bank accounts with same modus operandi and opened demat accounts with one bank accounts with series of names attached with each account. Thereafter, Karvy had introduced saving bank accounts of Key Operators like Roopal Panchal, Kelan Atul Doshi with IOB in the month of March, 2005 and thereafter also certified list of names attached with each account and enabled them to get finance from IOB. Further, Karvy itself in the month of July, 2005 extended finance to the key operators whom it had introduced with BhOB and IOB and in the month of September, 2005 Karvy made an attempt to open 10,000 demat accounts of Roopal Panchal with the bank accounts of IOB. Karvy submitted that it had returned the demat account opening forms to the applicants for want of adequate compliance of KYC norms. However, it is relevant to note that Karvy had already extended finance to demat accounts with the same modus operandi and with the same name with different surnames as explained elsewhere in the report.

9.120. The analysis of the afferent demat accounts of Roopalben Panchal used in the IPO of IDFC is mentioned in the table below: No of afferent demat accounts Name of the Bank as per demat records Name of the account holder Date of opening of bank account Date of opening of demat account on NSDL / CDSL 297

9.121. It is noted that the afferent demat account holders financed by IOB had indicated BhOB as their banker in their respective demat records. It is seen that Karvy Stock broking Pvt. Ltd had introduced the 19 bank accounts of Roopal Panchal with IOB Thaltej Branch with list of 50 names and signatures certified by Karvy Stock Broking. Based on such certification, the afferent accounts of Roopal Panchal were able to avail IPO finance in the IPO of IDFC for 15,131 afferent applicants. The analysis of the said demat accounts suggests that first bank accounts were introduced by Karvy and thereafter Key Operators have adopted same modus operandi as could be observed from the fact that all the key operators had same modus operandi of having one main account with series of sub-numbers. The following Key Operators who hold bank account with BhOB had used the same modus operandi. The details of such bank accounts and the number of dematerialized accounts that indicated these bank accounts in their demat records is given below:

Name of the Key Operator BhOB Bank account no Number of demat accounts Remarks

Roopal Panchal

9550

15000

The bank accounts number had bank account number starting from 9550 / 1 to 9550 / 15000

Kelan Atul Doshi

151008993

700

The bank accounts number had bank account number starting from 151008993/ 1 to 151008993 / 700 Biren Kantilal Shah 2527

700

The bank accounts number had bank account number starting from 2527 / 1300 to 2527 / 2000 9.122. It is observed that Karvy stock broking had introduced the bank account no. 12004 of Kelan Atul Doshi with IOB, Stadium Branch, Ahmedabad.

9.123. Role of KSBL as Broker (Observations on bidding of IPO forms): The process flow relating to bidding of application forms as indicated by Karvy during the enquiry proceedings is given below: (Editor: The text of the vernacular matter has not been reproduced. required.)

9.124. KSBL in its reply dated May 09, 2006 to the SEBI interim dated April 27, 2006 had stated as below at para 4.25.11: It is submitted that the changes in the process followed by BHOB as part of the internal procedure and process towards IPO funding had never been suggested in the Idea Paper. Maintaining of "manual control sub ledger account" confirms that the bank was aware of individual customers and had accounts for them, though not in the system. Further the applications have been handed over to us for the purpose of bidding along with individual pay orders, signifying loans being provided to that many applicants. It is necessary for each such application to be bidded in the NSE / BSE system before depositing the applications along with the payment instrument, with the bank, designated as the collecting Bank for the IPO. Biding can be done only by syndicate / sub-syndicate members to the issue and we being a syndicate / sub syndicate have provided the service of upload to NSE / BSE for these loan cases. 9.125. Further, KSBL, in its reply dated May 19, 2007 to the post enquiry show cause notice dated May 04, 2007 of SEBI stated at para 17.6 as below:

On the last day of the issue, there are huge volumes of applications submitted by various investors. These applications along with the payment instruments are submitted to the escrow bankers to the issue on the following da subsequent to the closure of the issue. 9.126. From the reply, it is clear that at the time of bidding of the IPO application form, it is necessary for the syndicate member to obtain the duly filled in application form along with the payment instrument (cheque/DD). Further, in terms of Guideline 11.3.1 Clause xvii (a) of SEBI (DIP) Guidelines, 2000, "The broker may collect an amount to the extent of 100% of the application money as marging money from the clients / investors before he places an order on their behalf... ". Thus in terms of the guidelines prescribed by SEBI before placing the order of the IPO applicant on the Exchange System ( i.e. bidding), the broker is required to collect 100% of the application money as margin from the clients/investors. 9.127. Also, based on information collected by SEBI from Market Participants which act as brokers/syndicate members, it is gathered that while bidding the IPO application, the broker/syndicate member verifies the application form and ascertains that the application money is duly filled in with the cheque/DD attached to the application form. 9.128. Therefore, in terms of regulatory guidelines, market practices and Karvy's own submissions, it is essentital for the IPO application forms to be accompainied by payment instruments. After bidding, the syndicate member forwards the application form along with the payment instrument to the banker to the issue (also known as Escrow Collection Bank). The banker to the issue detaches the instrument and sends the same for collection while simultaneously forwarding the application form to the Registrar to the issue. 9.129. As mentioned earlier, in the case of IDFC IPO, wherein Karvy Consultant Ltd. had acted as IPO financier, it had done RTGS transfer of Rs.51,90,78,000 to the IDFC escrow account on July 30, 2005. The IDFC IPO opened on July 15, 2005 and closed on July 22, 2005. Therefore it is seen that the RTGS transfer made by Karvy Consultants Ltd. to IDFC Escrow account was after the date of closure of the IPO. In view of the fact that RTGS took place in respect of 10900 applicants after the closure of the IPO, it appeared that these IPO applications were not accompanied by payment instruments at the time of bidding of the applications.

9.130. Further, in the case of Suzlon IPO, the public issue closed on September 29, 2005 and it was found that KCL had made RTGS transfer of Rs.20.51 crores to the escrow account of Suzlon IPO on October 5, 2005 i.e. many days after the date of close of the IPO. In this regard, KSBL has submitted that the amount to be transferred towards margin and the loan funded by KCL for various afferent applicants in the Suzlon IPO was ascertained only by the evening of September 29, 2005. Since September 30, 2005, October 1 and October 2, 2005 were Bank holidays KCL made RTGS transfer to the Suzlon IPO Escrow account on October 5, 2005 in respect of the applicants financed by it. Thus it may be seen that at the time when KSBL, a stock broker and also a sub-syndicate member had bid the application forms on September 29, 2005, the application forms were not accompanied by cheques / DDs for the application money.

9.131. Bidding of IDFC IPO Applications by KSBL (Stock Broker) In view of the above, the bidding of the IPO applications was examined: Based on the examination of the bid book data obtained from Karvy as well as the Stock Exchange, it is seen that the application was bid by the broker having the code "07701". Based on information obtained from NSE, it is seen that the broker code "07701" belongs to Karvy Stock Broking Ltd. Thus it is seen that KSBL in its capacity as a broker of NSE and also a sub-syndicate member has bid the application forms in respect of the applicants financed by KCL through IPO finance to the Key Operators. It is clear that the individual application forms of these applicants did not contain the payment for the IPO application. This is evidenced by the fact that if there had been a cheque/DD attached to the application form, the same would have been collected by the banker to the issue and there would have been no occasion for KCL to make RTGS transfer directly to the escrow account may days after the closure of the public issue. 9.132. It was seen that the 5200 IDFC IPO applicants financed by Karvy through Roopal Panchal had only eight surnames i.e. Pandya, Rathi, Desai, Verma, Gandhi, Trivedi, Vala and Pathak. The details are as below:

Last Name

No. of Applicants

PANDYA

1000

RATHI

500

DESAI

680

VERMA

1000

GANDHI

1000

TRIVEDI

200

VALA

100

PATHAK

720

Total

5,200

9.133. An extract of the salient fields of the bid book is given below in respect of 100 bids made in the name of applicants having the last name as "Pandya":

406, SHASHWAT OPP. GUJARAT COLLEGE ELLISBRIDGE OPP. GUJARAT COLLEGE, ELLISBRIDGE, AHMEDABAD 9.134. From the above table, it may be seen that the bids were entered by one Shri Shrishailam L, an employee of KSBL. The above 100 applications have been entered in a time span of 1 minute and 16 seconds ranging from 3:23:07 pm to 3:27:37 pm. It is seen that the bids have been entered within a time difference of 2-3 seconds. The address of all the applicants is the same. In many of the instances, the application numbers are continuous e.g. 32068477, 32068478, 32068479, 32068480, 32068481, 32068482, 32068483, 32068484, 32068485, 32068486, 32068487, 32068488, 32068489, 32068490, 32068491, 32068492, 32068493, 32068494, 32068495, 32068496, 32068497, 32068498, 32068499 and 32068500.

9.135. Further, the examination of the bid data revealed that KSBL had similarly bid the application forms in respect of thousands of applicants belonging to various Key Opertor Groups. The details are given below:

181146 to 182145 (1000 numbers) 9.136. It may be noted that in respect of the above applicants, Karvy provided consolidated refund order and also requested BhOB to adjust the refund against the loan provided by them. 9.137. Bidding in Suzlon IPO Further, it is noted that in Suzlon IPO, KSBL had bid the applications of the afferent entities pertaining to the key operators at Hyderabad. Since KCL had provided finance to the applicants and since the application was provided by KCL through direct RTGS transfer to the escrow account of Suzlon IPO, it follows that at the time of bidding these applications no payment instrument i.e. cheque / DD was available with the applications. Therefore, it follows that KSBL, acting as a broker and sub-syndicate member had bid the applications without receiving the 100% margin. 9.138. Issuance of Consolidated Refund: It is seen that Karvy-RTI has issued consolidated refund orders in the IDFC IPO favouring banks / financial institutions in respect of the applications that were financed by the banks / financial institutions. Based on data furnished by Karvy, the details of consolidated refunds given by Karvy-RTI in respect of large number of applicants is given below:

Consolidated Refunds issued by KCPL in IDFC IPO Refund Order No.

No. of applicants

Amount of Refund (Rs.) 690001

6488

25,01,51,328

690003

19

7,32,564

690005

93

35,85,708

690008

989

3,81,31,884

690009

2125

8,19,31,500

770001

364

1,42,27,334

9.139. The details of the consolidated refund orders issued by KCPL in the IPOs of ILFS and Sasken Communication are given below. It may be seen that the consolidated refunds were given in respect of the key operators Roopalben Panchal, Parag Jhaveri and Dharmesh Mehta. In these instances where consolidated refunds were issued by KCPL it is observed that the IPO applications were financed by KCL or BHOB and KCPL was also the RTI in these IPOs. Name of the IPO

Name of Key Operators Consolidated Refund Order no No of applicants

Amount

Financed by

ILFS

Roopal Panchal

600002

10,497

43,13,75,000

BHOB

Sasken Communication Roopal Panchal

500002

9,041

40,37,34,500

BHOB

Dharmesh B Mehta

500002

1,079

5,40,73,500

BHOB

Dharmesh B Mehta

534002

1,447

1,99,94,000

KCL

Parag Jhaveri

534005

999

4,46,03,000

KCL

Parag Jhaveri

500002

8,067

13,95,68,000

BHOB

9.140. The details of the Refund Orders pertaining to the IPO applications wherein KCL had made direct RTGS transfer of Rs.2089 crores to the Suzlon Energy escrow account are not available and hence no comments can be made on the Refund Orders in the IPO of Suzlon Energy. It is also seen that in respect of the applicants, IPO applications have been bidded by Karvy Stock Broking in its terminal. 9.141. It is understood that issue of a consolidated refund cheque in respect of numerous IPO applicants is not a market practice, as claimed by Karvy. It is understood that RTIs have a practice of issuing consolidated refund cheques only for applications made through internet i.e. web trades. In case of physical applications, the RTIs do not give a consolidated refund for multiple applicants. Thus, the issue of consolidated refund cheque was a practice peculiar to Karvy, which facilitated quick and easy encashment of refund money by the key operators. The refund money was used immediately thereafter by the key operators for making applications in the subsequent IPOs. Name of the KO

9.142. From the above table, it may be seen that in the IDFC IPO, KCL had made direct RTGS transfer to the escrow account on July 30, 2005 whereas the IPO had closed on July 22, 2005. The RTGS transfer of Rs. 51.91 crores was made by KCL in respect of the 10,900 applicants financed by it. Further, KCPL, the RTI, had issued consolidated refund orders in respect of these applications vide refund order dated August 5, 2005, which is a Friday. It is seen that the refund orders pertaining to the key operators were dispatched in the first lot of refund orders issued by the RTI In this context it may be recalled that KCL vide letter dated August 8, 2005 had requested BHOB to adjust the IPO finance provided by it against the refund amount. Thus, it may be seen that KCL had provided IPO finance to the key operators for a period of 15 days and had charged interest at 19% p.a. reckoning the 15 day finance period. However, by adopting the above modus operandi which was facilitated by the presence of the Karvy group entities at various stages of the IPO process, Karvy ensured that its money was actually used only for a period of 8-10 days thereby improving the returns on the money loaned by it. 9.143. Issuance of Refund in cases where no bank accounts were mentioned in demat records In terms of SEBI guidelines, in public issues, at the time of making allotment and issuing refunds the RTIs should use the demographic and bank details of the IPO applicants as contained in the depository system. It was found that in respect of 4000 dematerialized accounts held with Karvy DP pertaining to the key operators Purshottam Budhwani and Manojdev Seksaria, the data in the depository system did not indicate the bank account details of the dematerialized account-holders. Therefore, in the case of IDFC IPO, Karvy RTI could not have issued refund orders in respect of these 4000 dematerialized accounts pertaining to the key operators. However, it was found that Karvy RTI had indeed issued refund orders in respect of these 4000 dematerialized account-holders. When queried by the Enquiry Officer in this regard, KSBL in its reply dated January 19, 2007 stated that the bank details of the demat account holders was mentioned in the respective application forms and the same had been captured in the back office of the DP and upload to the DPM (Depository Participant Module of the CDSL depository system). KSBL further stated that b. ...On verification of the back office records, we find that the bank account details are available.... c. The absence of these details with CDSL may be due to system related issues in the software of CDSL, at the time of bulk upload. 9.144. Thus, it is clear that the depository system did not contain the bank account details of the 4000 afferent dematerialized account holders pertaining to the key operators Purshottam Budhwani and Manojdev Seksaria.

9.145. It follows that the refund was issued by Karvy RTI in respect of these 4000 applicants by accessing the back office records of Karvy DP, which shows that various entities belonging to the Karvy group were acting in a collusive manner with the key operators. 9.146. Directions of Karvy regarding Appropriation of Refunds BhoB Ahmedabad branch confirmed that they had not funded the IDFC IPO. However, it was seen that Roopal Panchal (through her bank account no. 15.100.9000 maintained with the branch) transferred an amount of around Rs. 14.28 crores on July 26, 2005 for the said issue. The refund for the same was received from Karvy Consultants Ltd.(KCL) through BhoB, Hyderabad branch. KCL., vide letter dated August 8, 2005 addressed to the Bhob, Hyderabad branch, enclosed a Bankers Cheque no 103594 dated 5/8/2005 drawn on ICICI Bank Ltd. for Rs.28.17 crores towards the refund of excess application money of IDFC issue and provided the list of account holders to whom credit of this amount was to be done. As per the said letter, KCL had funded these applications and had received a mandate letter from the customers for collecting the refunds as well as adjusting the same against the loan. KCL requested BhOB, Hyderabad Branch to debit Rs.26.08 crores to the customers' account and pay the same in favor of Karvy Consultants Ltd. As per the list attached by KCL, refund amount for account no. 9550 in the name of Devangi Panchal was Rs.20.04 crores out of which Rs.18.56 crores was to be paid to KCL. 9.147. Upon perusal of a letter bearing the subject "IPO of IDFCL issue" dated August 8. 2005 from BhOB Hyderabad branch addressed to BhOB Ahmedabad it is observed that it is mentioned in the letter that "We have been advised by M/s Karvy Consultants Ltd. that they have funded the IPO application of the enclosed list of parties who are your branch customers.

9.148. A consolidated refund order has been received at our end for the crediting the refund amount to the parties account. We understand (that) the customers have given an authority to debit their account with your branch and credit KCL for the loan granted for the purpose of the subject IPO funding. To avoid delay we have refunded the amount payable to KCL from our end out of the consolidated refund received. Refund money

Payment to KCL

Payment to investor No of applications

Panchal

200491200

185640000

14851200

5200

D B Mehta

19200888

17778600

1422288

498

Dhaval Katakia

10024560

9282000

742560

260

Dharmesh Katakia

9986004

8925000

714000

259

Alpesh Lakhani

9639000

8925000

714000

250

Mukesh G Popat

9639000

8925000

714000

250

Hemal Lakhani

9639000

8925000

714000

250

Hemal Lakhani

9639000

8925000

714000

250

Purshottam Bhudwani 2000

manoj Sekseria

2000

Parag Jhaveri

2125

Biren Kantilal Shah 1210

others

348

Total KO applications financed by KCL 14900

9.149. The above goes to show that Karvy was controlling the banking leg of the IPO activities through BhOB. While the securities market related transactions in the IPOs were handled by Karvy group entities, the funds part was managed by Karvy group through BhOB. This gave complete control to Karvy group over the entire process of IPO while using fictitious / benami names to corner IPO shares through the key operators.

9.150. Execution of off-market transfers During the course of enquiry proceedings, Karvy had submitted the process of DIS execution adopted by it. The same is reproduced below: (Editor: The text of the vernacular matter has not been reproduced. required.)

9.151. It was found during the SEBI inspection of Karvy DP that the issuance of welcome Kit which contains the DIS was decentralized and the Regional Managers were the authorized signatories for issuing the Welcome Kit to the investors. It was noticed that the welcome kit for IPO clients who were referred through the IPO sub- brokers of Karvy contained only single leaf DIS booklets along with the DIS booklet requisition slip. The correspondence addresses in respect of the accounts referred through IPO sub-brokers were those of the IPO sub-brokers. The Welcome Kit was sent to the correspondence address of demat clients and hence went to the IPO sub-brokers. 9.152. It was found during the course of inspection that the DIS issued to various BOs, who had opened the accounts introduced by the sub-brokers under the IPO scheme, were in continuous serial numbers. 9.153. It was seen that these DIS were pre-printed and contained all the material details such as ISIN number, company name, name of the BO, quantity, execution date etc. The verification of DIS revealed that the one person had signed on behalf of the BOs. 9.154. Based on a sample of physical DIS, prima-facie, it is observed that these DIS are computer generated with columns like Bo account number, First holder, ISIN, security name, Qty, Target client number being pre-printed. The details are as below: Sr. No.

DIS Sr. No.

Instruction No.

Source Client ID

Source Client name

Source DP

Target Client ID

Target DP

Name of Security

Quantity

Date of Execution

1.

200190918

1956033

14544833

Gandhi Roshan M

KCL

14405199

KCL

IDFC

266

08.08.05

2.

200190917

1956032

14544825

Gandhi Trishul M

KCL

14405199

KCL

IDFC

266

08.08.05

3.

200190916

1956031

14544817

Gandhi Payal M

KCL

14405199

KCL

IDFC

266

08.08.05

4.

200190915

1956030

14544809

Sheth Hitendra H

KCL

14405199

KCL

IDFC

266

08.08.05

5.

200190914

1956029

14544794

Sheth Mauli H

KCL

14405199

KCL

IDFC

266

08.08.05

6.

200190913

1956028

14544786

Sheth Vasu H

KCL

14405199

KCL

IDFC

266

08.08.05

7.

200190912

1956027

14544778

Sheth Vasu H

KCL

14405199

KCL

IDFC

266

08.08.05

8.

200190911

1956026

14544769

Doshi Vatsal G

KCL

14405199

KCL

IDFC

266

08.08.05

9.

200190910

1956025

14544750

Doshi Kajri G

KCL

14405199

KCL

IDFC

266

08.08.05

10.

200190909

1956024

14544743

Mistry Bokshi P

KCL

14405199

KCL

IDFC

266

08.08.05

11.

200190908

1956023

14544735

Mistry Kalpen P

KCL

14405199

KCL

IDFC

266

08.08.05

12.

200190907

1956022

14544727

Mistry Vibhut P

KCL

14405199

KCL

IDFC

266

08.08.05

13.

200190919

1956034

14544840

Mistry Mohan R

KCL

14405199

KCL

IDFC

266

08.08.05

14.

200190901

1956016

14544663

Sheth Chirag S

KCL

14405199

KCL

IDFC

266

08.08.05

15.

200190902

1956017

14544670

Sheth Samrat S

KCL

14405199

KCL

IDFC

266

08.08.05

16.

200190903

1956018

14544689

Sheth Kanjari S

KCL

14405199

KCL

IDFC

266

08.08.05

17.

200190904

1956019

14544698

Gandhi Chetak R

KCL

14405199

KCL

IDFC

266

08.08.05

18.

200190905

1956020

14544702

Gandhi Akshar R

KCL

14405199

KCL

IDFC

266

08.08.05

19.

200190906

1956021

14544719

Gandhi Anali R

KCL

14405199

KCL

IDFC

266

08.08.05

Note: The target BO ID of 14405199 belongs to SEIPL. 9.155. The above table shows that details contained in the DIS used for making off- market transfers from the afferent dematerialized accounts to the dematerialized account of key operator viz. SEIPL. It may be noted that the DIS are in continuous serial number. 9.156. Further, in the above DIS all the material particulars including Bo account number, First holder, ISIN, security name, Qty, Target client number and Transaction Number being printed. It may be mentioned that the transaction number is generated after execution of DIS and the number is hand written by the DP staff after execution. In the normal course, the DP executes the transaction by punching in the depository system the details contained in the DIS. Upon execution, the depository system generates a transaction number which is hand written by the DP for the purpose of reference and the DIS is kept in the records of the DP. The printing of Transction number in the DIS as detailed in the table above, is possible only when the DIS has been printed after the execution of the transction i.e. no DIS existed at the time of execution of off-market transactions and the DIS was printed after execution. In terms of Regulation 42(2) and 42(3) of SEBI DP Regulations 1996

(2) A participant shall register the transfer of securities to or from a beneficial owner's account only on receipt of instructions from the beneficial owner and thereafter confirm the same to the beneficial owner in a manner as specified by the depository in its bye-laws.

(3) Every entry in the beneficial owner's account shall be supported by electronic instructions or any other mode of instruction received from the beneficial owner in accordance with the agreement with the beneficial owner.

9.157. It may be seen from the above that the DIS serial numbers issued to clients of various groups are in continuous serial numbers. This is possible only if loose DIS of one booklet is issued to various clients. Even in such a scenario it is highly unlikely that the DIS executed by various persons making off-market transfers to one entity will have continuous serial number. This is possible only if DIS slips had been issued by the DP to one or few persons controlling the alleged group. 9.158. The details contained in the sample CDSL DIS executed by Karvy DP is summarized below: Sr. No.

DIS Sr. No.

Instruction No.

Source Client Id

Source Client name

Source DP

Target Client ID

Target DP

Name of Security

Quantity

Date of Execution

1.

78965

18420

130144000

0147251

Aditi Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

2.

78964

18419

130144000

0147245

Turang Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

3.

78963

18418

130144000 0147230

Rohini Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

4.

78962

18417

130144000

0147226

Miya Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

5.

78961

18416

130144000

0147211

Yavan Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

6.

78960

18415

130144000 0147207

Lakendra Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

7.

78959

18414

130144000 0147190

Jimish Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

8.

78958

18413

130144000 0147186

Devi Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

9.

78957

18412

130144000 0147171

Bankim Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

10.

78956

18411

130144000 0147167

Adip Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

11.

78955

18410

130144000

0147152

Tukhar Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

12.

78954

18409

130144000 0147148

Deparv Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

13.

78953

18408

130144000 0147133

Nisar Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

14.

78952

18407

130144000 0147129

Yatri Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

15.

78951

18406

130144000 0147114

Lajja Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

16.

78990

18405

130144000 0147509

Lakshana Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

17.

78989

18404

130144000 0147492

Jinal Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

18.

78988

18403

130144000 0147488

Hanil Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

19.

78987

18402

130144000

0147473

Dhara Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

20.

78986

18401

130144000 0147469

Barun Gandhi

KCL

130144000 0307503

KCL

IDFC

266

11.08.05

Note: The target BO ID of 1301440000307503 belongs to Roopalben Panchal 9.159. In respect of the above CDSL DIS, it was observed that all the relevant columns including the target DP and target BO ID were pre-printed. The transaction number was not mentioned in the DIS as is the normal practice. The pre-printing of all the relevant columns including target DP and target BO ID shows that the DP was assisting the key operators in executing their game plan. 9.160. Based on information obtained from CDSL, it is seen that hundreds of the DIS submitted by each of the following groups are in continuous serial numbers thereby showing that Karvy DP had issued the DIS slips pertaining to hundreds of benami / fictitious dematerialized account-holders to a few purporting to represent the group and the details are as below: 9.161. CDSL DIS bearing continuous serial numbers used by various key operators in IDFC IPO Sr. No

Based on the information submitted by KSBL vide letter dated June 18, 2007, it is observed that the DP had issued loose DIS slips bearing continuous serial numbers to key operators in respect of various afferent accounts pertaining to these key operators. The details of DIS used by the key operators for making off- market transfers of IPO shares in respect of ILFS, Sasken and Suzlon IPOs are given below: 9.163. Issue of loose slips to Key Operators in the IPO of ILFS as submitted by Karvy

Name of the Key operators DIS Serial No from

DIS serial No To

No of DIS

Manoj Sekseria

42853

43064

211

Roopal Panchal

200142961

200148122

5161

Total

5372

9.164. In the IPO of Sasken Communications. Name of the Key operators DIS Serial No from

DIS serial No To

No of DIS

Jhaveri group

200211506

200212027

521

Roopal Panchal

84146

200209281

86237

200210877

2091

1596

Dharmesh B Mehta

69652

69993

341

Total

4549

9.165. IPO OF SUZLON ENERGY Name of the Key operators. Name of the Key operators DIS Serial No from

DIS serial No To

No of DIS

Manoj Sekseria

214330

215347

1017

Bhudwani

213312

214329

1017

Total

2034

9.166. KSBL has contended that requests for issuance of DIS slips were received from sub-brokers and hence their numbers are continuous. They further contended that signature on DIS tallied with specimen signature available with them and there was no irregularity. In view of the numerous facts which corroborate one another and the fact that issuance of loose DIS slips is a violation of SEBI Circulars, I find this explanation to be prima facie unacceptable. 9.167. In respect of the off-market transfers from the afferent accounts to the demat accounts of the key operators, it was observed that the delivery instructions slips (DIS), which were necessary to be filled in and signed by the beneficial owner to transfer the shares in his demat account, were pre-printed by KSBL including the details of the scrip name, ISIN, quantity of shares and the target ID. This was done to facilitate the transfer of shares from thousands of afferent accounts to the demat accounts of the key operators, as otherwise, it would have been impossible to manually fill in the particulars in thousands of DIS slips in respect of each of those accounts. 9.168. KSBL submitted that they had pre-printed only the serial number, name of the client and client ID and that the other pre-printed details in DIS like the ISIN, number of shares, target DP ID etc. were filled in probably by sub-broker. In my view, this contention too is prima facie unacceptable as pre-printing of all details including serial numbers and the above details appears to have been done at one go, as seen from the copies of relevant DIS. 9.169. It is seen that transaction number mentioned on the DIS is the credit transaction number and is not the debit transaction number, as is the normal case. It is significant to note that credit transaction number is not available with the DP at the time of entering the DIS in the system as the details are only available in the target client account. Incidentally in this case target client account was also with the same DP ie. KSBL and therefore it was possible for the DP to have the details of the credit transaction number. 9.170. It was further noted that in respect of the subject off-market transactions many demat accounts were debited and a single demat account was credited. Since it is easier to obtain credit transaction number from the demat account statement of Roopalben Panchal, it appears that the DP has conveniently used the credit transaction number on the DIS used for debiting various demat accounts and this indicates that the DP had no debit instruction from the afferent account holders and DIS had been generated post-facto to make up the records by conveniently using the CIN available from one account thereby dispensing with the rigmarole of wading through thousands of afferent account statements which is cumbersome and laborious. 9.171. With respect to the credit instruction number (CIN) mentioned in the DIS instead of debit transaction number, Karvy DP has claimed that the CINs were filled in at the instance of CDSL during the inspection of the DP by the depository. In this regard, I note that in an earlier proceeding before me i.e. the post-decisional hearing granted to the DP pursuant to the interim order dated April 27, 2006, KSBL contended that the mentioning of CIN in the DIS was a clerical error. The excuse of clerical error then proferred by Karvy DP did not pass muster in the earlier proceeding and therefore, it appears that Karvy DP has thought up a new excuse stating that the CIN was entered at the instance of the depository. Therefore, I find this explanation to be prima facie untenable.

9.172. Observations on Fabrication of records The account opening forms of many of the afferent dematerialized accounts opened in bulk, as above, were found to contain letters from scheduled commercial banks certifying the identity and address of the account holders. Karvy DP accepted these bank letters towards POI and POA for opening demat accounts. On further verification, it was found that these bank letters relied upon by Karvy DP for opening dematerialized accounts were forged. An inference of fabrication of KYC documents (bank introduction letters) by KSBL for showing compliance with KYC norms was drawn. The reasons broadly for such inference were the following: (a) The respective banks had denied issuing the same and stated that the stationery was materially different from their bank stationery (in case of BHOB), that there was no official by name of purported signatory (in case of two branches of BHOB). Further, the photographs appearing in the introduction letter and in the corresponding bank records did not match. (b) The clients representing various groups have denied having submitted such bank introduction letters with their demat account opening forms.

(c) The client details in the relevant bank introduction letters have exact correspondence with that in the depository system including minutiae like capital letter, space, comma, full stop etc. The inference was that the client details were downloaded from the depository system, after the demat account was opened. (d) There was perfect matching of bank details, including minutiae between that in the depository system (which are associated with a bank branch's MICR number) and that contained in the forged bank letter. In this context, it was observed that practically the MICR details such as bank name, branch name, address and PIN code were already available in the depository system and could not have been uploaded by anybody else. The inference therefore was that these details might have been downloaded from the depository system together with other details as in (c) above for use in forging bank introduction letters by someone who had access to the depository system, i.e. most likely the DP, KSBL. 9.173. Karvy DP contended that the fabrication might have been done by other parties involved i.e. key operators and banks. The perfect matching of the details contained in the fabricated bank letters including minutiae with the data available in the depository system shows that the fabrication could have been done by an entity having access to the depository system. In this regard, I note that the key operators were not DPs and do not have access to the depository software. As for banks, I find no reason for them fabricate their own letterheads when they might as well have used the original letterheads available with them. 9.174. As regards the finding that the bank introduction letters contained the client details corresponding exactly even to the last spelling and punctuation mark to that in the depository system, KSBL contended that such data in soft form was taken from sub-brokers and used for upload in the system and therefore was also available with the sub-brokers. While it is possible that such data was also available with sub- brokers, the further matching of the details in the bank introduction letters also with the MICR details like bank address, city and PIN code as decoded in the depository system could reasonably lead to the inference that KSBL might have used the data in fabricating the letters.

9.175. The uploading of data in soft copy cannot explain the perfect matching of the bank details in the fabricated bank letter with the MICR details contained in the depository system. The perfect matching of the bank details in the fabricated bank letters accepted by Karvy DP towards KYC verification for opening demat accounts with the MICR details in the depository system can only lead to the inference that the MICR data in the depository system has been downloaded to fabricate the bank letters. Since only the DP has the facility to download the data from the depository system, the attempt of Karvy DP to deflect the needle of suspicion does not pass muster. 9.176. Karvy DP claimed that taking information from agents is a market practice adopted by DPs. In this regard, I understand that DPs do not accept information in soft copy from agents. In cases where large number of DP application details need to be entered into the depository system, the DPs engage data entry operators who come to the premise of the DP and make the entries in the depository software available at the DP's premise. An independent verification of the data is done by a staff of DP before uploading the same in the depository system. Thus, Karvy's claim of having accepted the details of demat clients in soft copies from the sub- brokers is at variance to the market practice and the claim is an after-thought to shift the blame to the key operators for the acts of commissions and omissions of Karvy DP. 9.177. Further, in order to accept the soft copy in the format that can be directly uploaded in the depository system, the DP would have to provide its agent the software relating to the depository system. If Karvy DP had indeed adopted such practice, the same is at variance to the market practice, as DPs do not provide access to the depository software to third parties outside the premise of the DP. 9.178. As noted earlier, it is not a practice of the DPs to provide the depository software outside their premise. If Karvy DP had provided the depository software to its sub- brokers for use outside the premises the same is at variance to the market practice. Alternatively, if it did not provide the depository software outside its premises, then the fabrication of the bank letters could have happened only in the premises of Karvy DP. Either way Karvy DP is guilty of allowing the depository software that is available to it as a registered DP, for being used to fabricate bank letters which in turn were used for opening dematerialized accounts in fictitious / benami names with the DP. That apart, the very creation of about 50,000 fictitious afferent accounts is nothing but fabrication.

10. CONSIDERATION OF KCPL RTI MATTER I have considered the Enquiry Report, the Show Cause Notice, the Reply submitted by KCPL and the oral submissions made on behalf of KCPL. Admittedly, KCPL, KCL, KSBL etc. are the group companies of Karvy and the connection between the various Karvy Group entities including that of KCPL is established in the discussion mentioned earlier in this order. The contention of KCPL that there was a clear division of operations between it and other Karvy entities is not acceptable in the facts and circumstances of the case which amply demonstrate how such a division gave way to a common cause by abusing their respective positions in the business chain which was evident in some of the IPO's. 10.1. I note that KCPL in its reply dated January 8, 2007 stated that it is a joint venture with equal shareholding between KCL (admittedly a Karvy group entity) and Computershare Ltd., Australia. In the reply of KSBL (in its capacity as a DP and a stock broker) it has been specifically mentioned that the Karvy group companies inter alia comprised of KCPL. Further, the communication of Shri Vincent Paul (an employee of KSBL) on behalf of KCPL would establish that there were certain managerial links between KCPL and KSBL and which also indicate that KCPL failed to maintain arms length distance with its associates as mentioned above. Further, Shri V. Mahesh (employee of KSBL was also the signatory of KCPL in the inspection conducted by SEBI. 10.2. As discussed earlier in this order the key operators opened multiple and fictitious applications in various IPOs and the act on the part of KCPL sending common refund order in respect of the applications made by the key operators would establish that the KCPL was supplementing the activities of its associates in various irregularities in the process of IPOs. 10.3. In the facts and circumstances, in view of the established direct connection between KCPL and other Karvy group entities the role of KCPL cannot be viewed in isolation but has to be seen in the overall context of the activities of other Karvy group intermediaries as discussed earlier.

10.4. I also note that KCPL had issued single consolidated refund orders in respect of the benami/ fictitious applications of Key Operators like Roopalben Panchal, Purushottam Budhwani, Manoj Seksaria and Sugandh Estates. In the Yes Bank IPO, KCPL issued a single refund order no: 400002 favouring Bharat Overseas Bank( BhOB) for 53.89 crores in respect of 12676 applicants. In the IPO of IDFC, single refund order no:610003 for Rs.27.35 crores was issued favouring BhOB in respect of 6878 IPO applicants. 10.5. It is pertinent to note that issuing of single consolidated cheque/refund orders have not been disputed by KCPL and it is evident that the consolidated cheques were forwarded to the financier. The fact that there were common directors at the helm of KCL and KCPL necessarily indicates that the said entities were aware of each others actions more so when one entity (KCL) was financing the IPO applicants and the other (KCPL) was issuing common refund orders in such cases. In this context, I note that KCL who acted as a financier in many such issues, obtained its dues in respect of repayments from IPO applicants whom it financed, directly from the bank out of the consolidated refunds credited to the bank by KCPL. Hence the act of issuing singe refund orders facilitated the entities who extended finance and the key operators who had applied in the IPO's to continue with the scheme/ arrangement till the same was detected by SEBI. Therefore, the action of KCPL cannot be viewed as facilitating the 'settlement process' and administrative in nature as contended by them. Though KCPL submitted that it had received requests from the financier institutions for issuing a consolidated refund order, the act of KCL adjusting the amount due to it as a financier out of the consolidated refund order issued by KCPL clearly indicates that KCPL was privy to the activities KCL.

10.6. Therefore, the alleged violations made by KCPL have to be viewed in the overall factual context. I note that KCL had arranged large amount of finance for many key operators mainly to Shri Purshottam Bhudiani, Shri Manoj Seskaria and Smt Roopalben Panchal. I also note that large number of afferent accounts were opened by the said key operators with the Karvy DP. Admittedly the issue of single consolidated cheques/ refund orders have not been disputed by KCPL and that the consolidated cheques were forwarded to the financier. The submission of KCPL was that if KCL was aware of the fictitious nature to the application the same could not be attributed to KCL. In the present case, I note that there were common directors in KCL and KCPL and that indicates that the entities were aware of the actions of each other, more so when one entity (KCL) was financing the IPO applicants and the other (KCPL) was issuing common refund orders in such cases. I also note that KCL who was the financier in many IPOs, obtained its dues in respect of repayments from IPO applicants whom it financed, directly from the bank out of the consolidated refunds credited to the bank by KCPL. Therefore, the action of KCPL could not be viewed as facilitating the settlement process and administrative in nature as contended by them. Further I also note that KCPL was aware of the actions of its related entities which was discussed in detail in the enquiry report.

10.7. Issuance of Refund in cases where no bank accounts were mentioned in demat records

10.8. In terms of SEBI guidelines, in public issues, at the time of making allotment and issuing refunds the RTIs should use the demographic and bank details of the IPO applicants as contained in the depository system. It was found that in respect of 4000 dematerialized accounts held with Karvy DP pertaining to the key operators Purshottam Budhwani and Manojdev Seksaria, the data in the depository system did not indicate the bank account details of the dematerialized account-holders. Therefore, in the case of IDFC IPO, Karvy RTI could not have issued refund orders in respect of these 4000 dematerialized accounts pertaining to the key operators. However, it was found that Karvy RTI had indeed issued refund orders in respect of these 4000 dematerialized account-holders. When queried by the Enquiry Officer in this regard, KSBL in its reply dated January 19, 2007 stated that the bank details of the demat account holders was mentioned in the respective application forms and the same had been captured in the back office of the DP and upload to the DPM (Depository Participant Module of the CDSL depository system). KSBL further stated that b. ...On verification of the back office records, we find that the bank account details are available.... c. The absence of these details with CDSL may be due to system related issues in the software of CDSL, at the time of bulk upload. 10.9. Thus, it is clear that the depository system did not contain the bank account details of the 4000 afferent dematerialized account holders pertaining to the key operators Purshottam Budhwani and Manojdev Seksaria.

10.10. It follows that the refund was issued by Karvy RTI in respect of these 4000 applicants by accessing the back office records of Karvy DP, which shows that various entities belonging to the Karvy group were acting in a collusive manner with the key operators. 10.11. All the activities of RTI need to be appraised in the context of the big picture. The same reveals that the afferent accounts were fictitious, crafted by playing on names in several permutations and combinations in a repetitive sequence. It was just a play on the names without the players. In effect the Karvy group was dealing only with key operators. In that view of the matter consolidated refund, albeit administratively convienent, assumes ominous significance. It turned out to be a collusive activity under the guise of administrative expediency. In appraising the role of Karvy Group, the basic feature of the case should not be lost sight of i.e one has to look beyond the elaborate edifice of make believe. Further, the closure of such afferent accounts by Karvy later in December 2005 confirms the nature of accounts the group was dealing, during their existence. 10.12. I note that the inspection conducted by SEBI found that KCPL had not exercised due diligence in weeding out multiple, invalid applications thereby allowing such applications to be allotted shares in the public issue of Yes Bank and IDFC Ltd. The details of such discrepancies as revealed during the said inspection were explained in detail in the enquiry report. Further, the discussion relating to DP contains copious references to interconnected activities among the group members besides highlighting their complementary role in abusing the IPO process. In view of the above, I do not find any reason to disagree with the findings of the Enquiry Officer.

11. CONSIDERATION OF KSBL BROKER MATTER I note that the Enquiry Officer in his report dated March 15, 2007 observed that the findings of the enquiry against KSBL as the depository participant might by considered as the same and was reflecting on the various activities of KSBL as the stock broker. He also observed that the various irregularities in the opening of accounts, irregularities in off market transactions by way of pre printed DIS etc. have to be taken into account as the same would also highlight the activities of KSBL as a stock broker in facilitating the key operators in furtherance of their objectives. 11.1. I note that KSBL had assisted and introduced the key operators in opening of bank accounts with BhOB, Worli, Goregaon and Ahmedabad branch. The said accounts have been introduced by the employees of KSBL. The submission of KSBL is that simply because its employees had introduced the accounts and put the address or stamp of the company on the forms, it could not be concluded that the Broker was aware of the activities of the employees. It further added that its employees introduced certain bank accounts after fulfilling the KYC requirements. In this context I note that in respect of the bank account number 12149 of Roopal maintained with BhOB 50 additional names were attached. As discussed above, KSBL in his appeal memo (SAT) admitted that it had given such certificate. Similarly 37 accounts were opened in the said branch with additional 50 names attached with the bank account opening forms certified by KSBL. 11.2. In view of the fact that the employees of KSBL were actively introducing the accounts to the bank indicate that it was facilitating opening of many bank accounts which in turn facilitated the opening of large number of demat accounts which were used for applying the IPO shares. In this context, I also note that the Karvy DP had opened as many as 37105 and 17795 demat accounts in CDSL and NSDL in a short time. The contention that the alleged afferent accounts have been opened by IPO sub brokers cannot be accepted in the facts and circumstances wherein the participation of the Karvy Group in its various roles as a broker and DP was manifest from their active involvement in the entire gamut of events. Further, I note that KCPL (another Karvy group entity) was the registrar to the issue in the public issue of Sasken Technologies and Suzlon Energy and the same facilitated the activities of the key operators and their subsequent sale of shares through KSBL. In the facts and circumstances, it is established that KSBL was involved in the entire manipulation by its active presence in various roles such as DP, broker, RTI (group company).

11.3. Based on the examination of the bid book data obtained from Karvy as well as the Stock Exchange, it is seen that the application was bid by the broker having the code "07701". Based on information obtained from NSE, it is seen that the broker code "07701" belongs to Karvy Stock Broking Ltd. Thus it is seen that KSBL in its capacity as a broker of NSE and also a sub-syndicate member has bid the application forms in respect of the applicants financed by KCL through IPO finance to the Key Operators. It is clear that the individual application forms of these applicants did not contain the payment for the IPO application. This is evidenced by the fact that if there had been a cheque/DD attached to the application form, the same would have been collected by the banker to the issue and there would have been no occasion for KCL to make RTGS transfer directly to the escrow account may days after the closure of the public issue. 11.4. It was seen that the 5200 IDFC IPO applicants financed by Karvy through Roopal Panchal had only eight surnames i.e. Pandya, Rathi, Desai, Verma, Gandhi, Trivedi, Vala and Pathak. The details are as below:

Last Name

No. of Applicants

PANDYA

1000

RATHI

500

DESAI

680

VERMA

1000

GANDHI

1000

TRIVEDI

200

VALA

100

PATHAK

720

Total

5,200

11.5. An extract of the salient fields of the bid book is given below in respect of 100 bids made in the name of applicants having the last name as "Pandya":

406, SHASHWAT OPP. GUJARAT COLLEGE ELLISBRIDGE OPP. GUJARAT COLLEGE, ELLISBRIDGE, AHMEDABAD 11.6. From the above table, it may be seen that the bids were entered by one Shri Shrishailam L, an employee of KSBL. The above 100 applications have been entered in a time span of 1 minute and 16 seconds ranging from 3:23:07 pm to 3:27:37 pm. It is seen that the bids have been entered within a time difference of 2-3 seconds. The address of all the applicants is the same. In many of the instances, the application numbers are continuous e.g. 32068477, 32068478, 32068479, 32068480, 32068481, 32068482, 32068483, 32068484, 32068485, 32068486, 32068487, 32068488, 32068489, 32068490, 32068491, 32068492, 32068493, 32068494, 32068495, 32068496, 32068497, 32068498, 32068499 and 32068500.

11.7. Further, the examination of the bid data revealed that KSBL had similarly bid the application forms in respect of thousands of applicants belonging to various Key Opertor Groups. The details are given below:

181146 to 182145 (1000 numbers) 11.8. It may be noted that in respect of the above applicants, Karvy provided consolidated refund order and also requested BhOB to adjust the refund against the loan provided by them. 11.9. Bidding in Suzlon IPO Further, it is noted that KSBL had bid the applications of the afferent entities pertaining to the key operators. Since KCL had provided finance to the applicants and since the application was provided by KCL through direct RTGS transfer to the escrow account of Suzlon IPO, it follows that at the time of bidding these applications no payment instrument i.e. cheque / DD was available with the applications. Therefore, it follows that KSBL, acting as a broker and sub-syndicate member had bid the applications without receiving the 100% margin. 11.10. In addition, it needs to be recognized that the fictitious nature of affrenet accounts is not disputed. In that view of the matter, the introduction of bank accounts relating to such afferent accounts by KSBL is a just a make -believe. Also the group was only dealing with the key operators. That being so, the entire exercise of introduction of accounts, the bidding process and the sale of shares peters out to be a screaming farce, which they now well. The bed-rock of material evidences as discussed in relation to DP while covering the IPO process bears eloquent testimony to the same. 11.11. The role of the DP and the Broker has been discussed in the preceeding paragraphs of this order. The said discussion is to be taken into account while deciding the role of the broker in the present proceedings. In view of the above, it is fairly established that the various irregularities in opening of accounts, assisting and facilitating the key operators in cornering of shares, irregularities in off market transaction by way of pre printed DIS etc. have to be taken into account as the same would also highlight the activities of KSBL as a stock broker in facilitating the key operators in their manipulative designs. 11.12. In the facts and circumstances it is fairly established that the Broker violated the provisions of Section 12 A (a), (b) and (c) of the SEBI Act and also regulation 3 & 4 (1) of the FUTP Regulations, 2003. Further by actively facilitating many key operators. It is established that the broker had failed to maintain high standards of integrity and further indulged in manipulation and malpractices and thereby violated the code of conduct specified in Clause A (1), A (3)and A (4) of Shedule II of the code of conduct specified in the Broker Regulations. 11.13. A mere denial on self serving assertion cannot displace the presumption of fact arising from inferences drawn from a mass of factual details which are incontrovertible. The circumstances are telltale and the presumption based upon them should prevail, more so where intentions are shrouded in secrecy or within the special or peculiar knowledge of persons concerned. Several circumstances of a determinative character coupled with the inference arising from the conduct of the parties in a major market manipulation could not simply be the handiwork of the key operators alone (as alleged by the DP) and could reasonably lead to a conclusion that the others were also responsible as brought out by wealth of material evidences. The cumulative evaluation of what has transpired at every stage of the transaction in a large number of IPOs clearly shows that the actions and inactions, and omissions and commissions on the part of the DP cannot be neglected as "at the highest a failure of KYC". On the other hand the activities of the Karvy group ex-facie exhibits a scheme to deny the genuine retail investors their quota of allotment. 11.14. Further the entire transactions starting from the introduction of bank accounts of key operators, opening of demat accounts of key operators, IPO funding to key operators and the sale of shares of key operators, through the Karvy group consisting KSBL (as a DP and a stock broker) and KCPL (RTI) would prove the active participation of the above intermediaries in the entire manipulation. The contention of the Karvy that it was not aware about the manipulation cannot be accepted. The contention of the Karvy that afferent accounts were opened by the key operators, some of them admittedly their IPO sub brokers, would show that Karvy had directly dealt with the said key operators and the entire transactions (from cornering the shares and subsequent sale of the said shares) were held between the karvy and the key operators under the guise of various demat accounts which were nothing but fictioius accounts created by the key operators with the assistance of Karvy. In this context, the observation of the SAT ".... It is an undisputed fact that thousands of fictitious/ benami demat accounts were opened with the appellant with common addresses and more than 10000 accounts were opened on one single day. The appellant was under a duty to check and comply with the various norms. The obvious appears to have been overlooked. Is the action of the appellant innocent is the question. The appellant is clearly under a cloud and the truth can be known only after a detailed inquiry. The findings of the inquiry will either remove the appellant or the cloud." 11.15. Admittedly, the fictitious demat accounts were opened by Karvy DP on the basis of bank accounts some of which were admittedly introduced by the employees of the Karvy Group and the same can be inferred from the reply of KSBL ( Broker) dated May 19, 2007 " simply because its employees had introduced the accounts and perhaps put the address or stamp of the company on the forms, it cannot be concluded that the company was aware of the activities of the employees." Coupled with the statement of Karvy in the appeal memo that the Respondent has not provided any proof for the introduction as stated in the impugned Order at para 6.35. The Appellant will be in a position to explain only on receipt of the documents relied upon by the Respondent to arrive at the said observation. It is stated tat the Appellant had not introduced the said 50 clients to IOB Thaltej. The Appellant had only certified, pursuant to the request of IPO sub broker, that the said 50 clients had demat account with the Appellant. It is submitted that all the said 50 clients had, as per Appellant's records, bank accounts with BhOB. Therefore the certification given by the Appellant was for existence of demat account as sought to be suggested" it is fairly established that Karvy was very much involved in the game plan. In the facts and circumstances, it is inconceivable that such large number of activities such as opening of demats accounts, bank accounts, IPO finance etc. could have been possible without active collusion of the Karvy group. Karvy can not escape by pleading ignorance and the only inference that can be drawn is that there was active participation on the part of Karvy group in the entire gamut of events which took place from the introduction of the bank accounts, opening of fictitious demat accounts, IPO finance to key operators etc. The DP is only feigning innocence which in the facts and circumstances can not be accepted. 11.16. Even otherwise, the evidence, direct or circumstantial, should be sufficient to raise a presumption in its favour with regard to the existence of a fact sought to be proved. As pointed out by Best in "Law of Evidence", the presumption of innocence is no doubt presumptio juris; but everyday practice shows that it may be successfully encountered by the presumption of guilt arising from circumstances, though it may be a presumption of fact. Since it is exceedingly difficult to prove facts which are especially within the knowledge of parties concerned, the legal proof in such circumstances partakes the character of a prudent man's estimate as to the probabilities of the case. However, in the present case, it is fairly established that the Karvy Group was actively involved in each and every part of the manipulation committed by the key operators by introducing the bank accounts of the key operators, opening the afferent accounts for the key operators, financing to key operators and further culminating in the sale of the IPO cornered shares on behalf of the key operators. 11.17. The series of transactions in the form of opening of bank accounts and demat accounts by the key operators with the assistance of Karvy and the subsequent funding to key operators and the sale of shares cornered by the key operators through the Karvy group would only lead to the finding that the said transactions were done with a manipulative intent. The said concerted level of activity and that too on a large scale in opening about 50,000 fictitious afferent accounts with the participation of all the necessary functionaries in the securities market viz. registrar to the issue, depository participant, financier and the stock broker is only compatible with the scheme of manipulating the IPO process with the other members of the group. The same entails violation of the provisions of Section 12A of Securities and Exchange Board of India Act, 1992, Regulation 3 and 4 of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, Regulations 19, 20A, 42, 43, 46 and 52 of Securities and Exchange Board of India (Depositories and Participants) Regulations 1996, Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, 6 and 13 of Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, Regulation 5, 7 and 15(1)(b) of Securities and Exchange Board of India (Stock Brokers and Sub - Brokers) Regulations, 1992. 11.18. Though the Enquiry Officer had observed that it can not be conclusively established that Karvy fabricated the bank introduction letters, I note that by introducing fictitious bank accounts, by opening fictitious demat accounts Karvy in a mannert of speaking, had fabricated such accounts which are otherwise non existent. 11.19. The elaborate discussion in this order on the various activities clearly demonstrate that Karvy group (RTI, Broker and the DP) were involved in the manipulation of IPO process. In the course of their reply, it has been canvassed that as group companies they were coordinating with each other in the group activities by rendering the necessary assistance respective to their business operations. In my view, it would take extreme naiveto believe in such a version, because the putative co-ordination under the guise of group activity in the vicissitudes of the instant case virtually amounted to making a common cause in the abuse of the IPO process. A group activity normally implies sharing of synergies for a combined business operation, where the group members have to contribute in their respective spheres. In the instant case, the summum bonum of the group activity was one of abusing the IPO process to facilitate cornering of the shares by key operators through fictitious afferent accounts. The same cannot partake the character of a group activity as understood in normal commercial parlance. Further , the case history as brought out is replete with profusion of instances where KSBL, KCPL( RTI) and KCL joined hands making use of their commercial engagements in the IPO process chain and such a concerted activity in unison with unity of control and purpose made it easy for the Group to steer the intended course of action without any hiccups. 11.20. It is not a case of any defect in the system, but a classic example of hoodwinking the system in seeming compliance with all the beguilements.

12. Conclusion The findings of the investigations on the role of Karvy group entities in the IPO irregularities, the findings of the enquiry proceedings and the findings emerging from the consideration of submissions of Karvy and the various related documents forming part of record from interim orders through the course of appeal till the present proceedings are briefly as under: 12.1. At the outset, the present order seeks to capture the developments in the present case from 2003 - 2005 in terms of the escalating scale of operations of Karvy group in diversified roles. 12.2. It is found that Karvy group entities were ubiquitously present in the entire gamut of the IPO process running from introducing bank accounts, opening of dematerialized accounts, arranging IPO finance, bidding of applications, making allotment, issuing refund, making off-market transfers (DIS) and sale of IPO shares on the stock exchanges. The role of Karvy group entities at each stage of the process has been examined for uncovering Karvy's role at every stage and to ascertain overall control beginning from opening of bank and dematerialized accounts till making refund and off-market transfer of IPO shares.

12.3. The examination covered the following activities of Karvy: Introducing the BhOB and IOB bank accounts of key operators and certifying addition of fictitious / benami names to the bank accounts of the key operators. This was done for the key operators to avail retail IPO finance from the banks in the names of the fictitious / benami entities. Using the bank accounts introduced by them for opening dematerialized accounts in the names of key operators and afferent entities. The afferent dematerialized accounts were opened in bulk on few dates around the dates of major IPOs. For the purpose of opening dematerialized accounts, the names / surnames of the afferent entities were used in various permutations and combinations and the address of the key operators were indicated as the address of afferent dematerialized account-holders. Providing of IPO finance to the fictitious / benami entities through the medium of key operators. KCL released the IPO finance (in non-RTGS cases) directly to the key operators. In effect, no funds were received from the bank accounts of the afferent entities and no refund was given to the bank accounts of the afferent entities. Karvy knew that the entities to which they purportedly provided IPO finance were fictitious / benami and in effect, Karvy was dealing only with the key operators. KCL an NBFC provided IPO finance to the key operator at an interest rate of 19% p.a. The interest was computed on the basis of IPO finance for a period 15 days. However, due direct RTGS transfer to the escrow account many days after the close of issue and due to prompt encashment of the consolidated refund, the period of financing was compressed to about one week, thereby significantly improving the returns on the loan provided by KCL.

Bidding of the application forms of fictitious / benami entities without the corresponding payment (100% IPO margin). KSBL acting as a stock broker and sub-syndicate member bid the application forms of the fictitious / benami applicants pertaining to various key operators even though application money was not received from the applicants at the time of bidding. Issuing of consolidated refund orders. KCPL, acting as RTI issued consolidated refund orders in respect of thousands of fictitious / benami applicants. This enabled quick and easy encashment of the refund money by the key operators and the refund money was recycled for the subsequent IPOs. This also facilitated quick return of the IPO finance where KCL had funded the key operators for making applications in fictitious / benami names. Further, since in many cases the bank accounts of the fictitious / benami applicants did not exist, if the RTI had issued individual refund orders mentioning the bank account numbers as available in the depository system, the encashment of the refund orders would have been impossible. Issuing directions for appropriation of refund money. KCL, acting as an NBFC had requested BhOB to adjust the refund pertaining to thousands of fictitious / benami applicants towards the IPO finance provided by it to the key operators. Executing off-market transfers including irregularities relating to issuing and processing of DIS. KSBL (erstwhile KCL), acting as DP, had executed thousands of off-market transfers from the afferent dematerialized accounts to the dematerialized accounts of the key operators within a span of one day. In ordinary course, the key operators could not have got the same done without the involvement of the DP. It was found that the off-market transfers had been executed by the DP in some instances without there being any Delivery Instruction Slips and in certain other instances, featuring pre-printed columns in respect of all relevant fields including target client details which can never be in the knowledge of the DP before execution, enabling the key operators to execute thousands of off-market transfers in a single day. 12.4. The manner of opening bank accounts and dematerialized accounts clearly demonstrates Karvy's control and their knowledge of the fictitious / benami nature of these acco